Reference no: EM132578272
Question A. Ally holds a RM200,000 portfolio consisting of the following stocks. The portfolio's beta is 0.875.
Stok [Stock] Pelaburan [Investment] (RM) Beta
A 50,000 0.50
B 50,000 0.80
C 50,000 1.00
D 50,000 1.20
Total 200,000
Sekiranya Ally menggantikan Stock A dengan stok lain iaitu stok E, yang mempunyai beta 1.50, apakah beta beta portfolio baru?
If Ally replaces Stock A with another stock E, which has a beta of 1.50, what will the portfolio's new beta be?
Question B. Company A has a beta of 0.70, while Company B's beta is 1.20. The required return on the stock market is 11.00%, and the risk-free rate is 4.25%. What is the difference between A's and B's required rates of return?
Question C. Suppose you hold a portfolio consisting of a RM10,000 investment in each of 8 different common stocks. The portfolio's beta is 1.25. Now suppose you decided to sell one of your stocks that has a beta of 1.00 and to use the proceeds to buy a replacement stock with a beta of 1.35. What would the portfolio's new beta be?
Question D. If a company's beta were to double, would its required return also double? Explain
Question E. A stock had a 8.47% return last year, a year when the overall stock market declined. Does this mean that the stock has a negative beta and thus very little risk if held in a portfolio? Explain
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