Invested in well-diversified portfolio of stocks

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Reference no: EM131985469

There are few, if any, real companies with negative betas. But suppose you found one with β = −.22

a-1. How would you expect this stock's rate of return to change if the overall market rose by an extra 8%? (A negative answer should be indicated by a minus sign. Input your answer as a percent rounded to 2 decimal places.)

Change in stock's rate of return % ______________

a-2. How would the stock's rate of return change if the overall market fell by an extra 8%? (Input your answer as a percent rounded to 2 decimal places.)

Change in stock's rate of return % ______________

b. You have $1 million invested in a well-diversified portfolio of stocks. Now you receive an additional $20,000 bequest. Which one of the following actions will yield the safest overall portfolio return?

Reference no: EM131985469

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