Determining the new beta of the portfolio

Assignment Help Finance Basics
Reference no: EM133074624

You hold a diversified portfolio consisting of a $5,000 investment in each of 20 different common stocks. The portfolio beta is equal to 1.6. You have decided to sell one of your stocks, a lead mining stock whose b =1.3, for $5,000 net and to use the proceeds to buy $5,000 of stock in a steel company whose b =2.6. What will be the new beta of the portfolio?

Reference no: EM133074624

Questions Cloud

Is burning a flag is protected as a form of speech : The police caught him, afterwards, he was arrested. Is burning a flag is protected as a form of speech under the First Amendment
What is bbc return on equity : Billy Bob Corp has a profit margin (income to sales) of 2.9%. Sales-to-assets measures a ratio of 4.9x. The capital structure of BBC is 40% debt & 60% equity. W
Default risk premium on corporate bonds : Suppose 10-year T-bonds have a yield of 5.25% and 10-year corporate bonds yield 8.20%. Also, corporate bonds have a 0.25% liquidity premium versus a zero liquid
What is herd behavior : Why are investors concerned about market contagion due to Evergrande's debt issues?
Determining the new beta of the portfolio : You hold a diversified portfolio consisting of a $5,000 investment in each of 20 different common stocks. The portfolio beta is equal to 1.6. You have decided t
What is the amount and percentage of increase or decrease : Based on this information, what is the amount and percentage of increase or decrease that would be shown on a balance sheet with horizontal analysis
Calculate the future value of the money : Step 1: Calculate the future value of the money you will need.How old are you now?
What stock price will you receive a margin call : The maintenance margin ratio is 30%. Below what stock price will you receive a margin call?
Explain four generally accepted accounting principles : 1. Define and explain the difference between the Money Market and the Capital Market. Present examples.

Reviews

Write a Review

Finance Basics Questions & Answers

  Determine the present value of the bonds cash flows

The Garcia Company's bonds have a face value of $1,000, will mature in 10 years, and carry a coupon rate of 16 percent. Assume interest payments are made semiannually.

  What is the range of risk aversion

Suppose that the borrowing rate that your client faces is 11%. What is the range of risk aversion for which a client will neither borrow nor lend

  Calculate the amounts received by a and b

a) Two counterparties, A and B, agreed on a five-year interest rate swap, whereby A received annual payments based on a floating interest rate and B received an

  Explain the direction of the bond price

Explain the direction of the bond price, all other things assumed to be constant.

  What is the price of a share of hnh stock now

Assume that management makes a surprise announcement that HNH will no longer pay dividends but will use the cash to repurchase stock instead. What is the price of a share of HNH stock now?

  What will the bondholder receive

a. In BAD times; what will the bondholder receive? b. Compute the expected return to the bondholder.

  Australian securities exchange index

Nancy Drew at TallTree, Inc. is seeking potential arbitrage opportunities in the Australian financial markets. She gathers the following data on the Australian

  What is the effective borrowing costs

An Australian company observes they can borrow in the US at 4% p.a. whereas to borrow locally would cost 6% p.a. They decide to borrow US $10 million

  How funds are transferred in financial market

How funds are transferred in financial market, households, firms and government?

  What is the initial investment outlay the company spent and

talbot industries is considering an expansion project. the necessary equipment could be purchased for 9 million and

  There are three major approaches for managing and

there are three major approaches for managing and resolving conflict in an organization. define these three approaches

  Investigate the financial innovations

The author wants to investigate the financial innovations that are produced in Conventional and Islamic banking to know which banking sector

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd