How many dollars would you put in asset b

Assignment Help Macroeconomics
Reference no: EM132507071

You think a certain stock in the gold-mining industry (stock A) is overvalued, so you plan on shorting $10,000 of it. You would like to isolate your bet on the alpha of the stock, so you want to hedge out all your exposure to the market and to the gold-mining industry.

Stock A has a market beta of 1.1, and a gold-mining industry beta of 1.5.

Asset B (a gold-miners ETF ) has a market beta of 0.8 and a gold-mining industry beta of 1.5

Asset C (SPY) has a market beta of 1 and a gold-mining industry beta of 0.2.

If you used assets B and C to get a portfolio that had a market beta and gold-mining industry beta of 0

How many dollars would you put in Asset B?

How many dollars would you put in Asset C?

Reference no: EM132507071

Questions Cloud

Discounted cash flow or capitalized cash flow models : When using Discounted Cash Flow or Capitalized Cash Flow models, what is the most dynamic variable that affects the valuation? Explain why
Compute the expected rate of return eri for lauren labs : Compute the expected rate of return E(Ri) for Lauren Labs. Round your answer to four decimal places.
Prepare the journal entry to record interest expense : Prepare the journal entry to record interest expense and bond discount amortization on December 31, 2022, assuming no previous accrual of interest.
How do know if salaries and wages are fixed or variable : How do know if salaries and wages are fixed or variable? The salaries and wages related to da Vinci surgeries are the support personnel
How many dollars would you put in asset b : How many dollars would you put in Asset B? How many dollars would you put in Asset C?
Prepare journal entry to record the sale of bonds on june : Blossom Company issues $250,000, 20-year, 6% bonds at 101. Prepare the journal entry to record the sale of these bonds on June 1, 2022.
Arbitrage opportunities in abc stock : Given the following information, could you find any arbitrage opportunities in ABC stock? If so, what is your arbitrage procedure and profits?
Draw class diagram showing relationship among the classes : ou are required to develop program as below by applying OOP principles and constructs: Draw the class diagram showing the relationship among the classes
Hearing the news of a potential corporate tax-cut : A financial analyst becomes excited hearing the news of a potential corporate tax-cut. The government is going to lower the tax rate from 35% to 21%.

Reviews

Write a Review

Macroeconomics Questions & Answers

  Describe the stages of economic development

Describing Use a graphic organizer like the one below to describe the stages of economic development that many nations experience.

  President barack obama argued

In a speech in late 2011, President Barack Obama argued that: "Probably the single greatest cause of the financial crisis and this brutal recession has been the housing bubble that burst four years ago. Discuss in 500 words " What did president mea..

  Calculation of the cpi

What factors are considered in calculation of the CPI? Explain your answer. Where would you find data on CPI and PPI for the United States? What does the current level of inflation tell you about the state of the U.S. economy?

  Discuss the sticky-wage model of aggregate supply

Discuss the sticky-wage model of aggregate supply, carefully identifying any assumptions made. How well does the sticky-wage model explain the observed behaviour of real wages over the business cycle?

  Elucidate the one thing regarding the role

Elucidate the one thing, regarding the role of the government that separates classical economic theories and Keynesian economic theory.

  Define the value of the dollar relative to the euro

How are each of the following events likely to affect the value of the dollar relative to the euro? a. interest rates in the European Union increase relative to the United States b. the European Union price level rises relative to the U.S. price leve..

  Nebraska and virginia each have acres of farmland

Assume Nebraska and Virginia each have acres of farmland. The following table gives hypothetical figures for yield per acre in the two states Nebraska Virginia

  Explain why do shortages and surpluses exist for different

There is a shortage of college basketball and football tickets for some games, and a surplus occurs for other games. Explain why do shortages and surpluses exist for different games.

  Decrease corporate income tax rates

Suppose Congress votes to decrease corporate income tax rates. Use the AD/AS model to analyze the likely impact of the tax cuts on the macroeconomy. Show graphically and explain your reasoning. What exactly causes AD and/or AS to shift? What happe..

  At what quantity firm indifferent between technologies

A firm is deciding between two different sewing machines. Technology A has fixed costs of $500 and marginal costs of $50. Technology B has fixes costs of $250 and marginal costs of $100. At what quantity is the firm indifferent between the two tec..

  You are the chairperson of the federal reserve the date is

you are the chairperson of the federal reserve the date is june 2009 and a recession is ahead. using the monetary tools

  By how much will nominal gdp have to fall

How will households and businesses react if the central bank reduces the money supply by $25 billion Households and businesses will not react OR Households and businesses will increase spending OR Households and businesses will reduce spending.

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