Each stocks what would be the beta of your portfolio

Assignment Help Financial Management

Reference no: EM131532772

What are the betas listed for these companies?

Wells Fargo beta = 1.03

BM beta = 0.87

1. If you made an equal dollar investment in each stocks what would be the beta of your portfolio?

2. If you made 70% of dollar investment in stock A, and 30% of dollar investment in stock B, what would be the beta of your portfolio? Please show your work.

3. Apply the Capital Asset Pricing Model (CAPM) Security Market Line to estimate the required return on these two stocks. Assumptions and Data: Note that you will need the risk-free rate and the market risk premium. Assume a 5% market risk premium. To get the current yield on 10-year Treasury securities go to Finance!Yahoo’s (www.finance.yahoo.com) -click on Market Data - Bonds. You will use the current yield on 10-year Treasury securities as the risk-free rate to estimate the required rate of return on stocks.

4. Compare the required return on these stocks calculated using CAPM in question #3 against their historical return over the last 52 weeks, found in the Yahoo!Finance - Key Statistics. Is there a difference between these returns? Is this a problem? Why is there a difference?

Reference no: EM131532772

Questions Cloud

What will the price of this stock : What will the price of this stock be in 7 years if investors require a 15 percent rate of return.

Company network performance : What are the possible security threats that have a direct effect on a company's network performance?

Describe the problem you identified within the department : Describe the problem you identified within the department or unit using an open- systems approach, and state where the problem exists .

What kind of structure does your organization use : Analyzing Organizational Structure For this chapter, you will analyze the structure of a real organization such as a department store, restaurant, hospital.

Each stocks what would be the beta of your portfolio : What are the betas listed for these companies? If you made an equal dollar investment in each stocks what would be the beta of your portfolio?

Perform the appropriate descriptive analysis of the data : Analysis of your descriptive analysis results and include a copy and paste your output from your analysis into your final document

Five methods presented in capital budgeting : Given the five methods presented in Capital budgeting, which method is the best for evaluating a projects contribution to firm value.

Trouble ticket escalated with a high priority : You are a technical field engineer looking at your daily tickets and one of them is a trouble ticket escalated with a high priority.

Rate-sensitive assets than rate-sensitive liabilities : Assume that American First Bank (AFB) has more rate-sensitive assets (in terms of dollars) than rate-sensitive liabilities.

User Account

All Pages