Portfolio equally invested in risk-free asset

Assignment Help Financial Management
Reference no: EM133306323

Question

You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.1 and the total portfolio is equally as riskyr as the market, what must the beta be for the other stock in your portfolio?

Reference no: EM133306323

Questions Cloud

Residential mortgage backed security : Describe why a Residential Mortgage Backed Security (RMBS) tranche with a BB rating would generate a higher rate of return than a tranche with a AAA rating.
Brute force method for finding future values : You have a goal of wanting to provide some assurance to your family that they will be taken care of financially if anything unfortunate happens to you.
Company deferred profit-sharing plan : Karen has worked at ASD Ltd as an aerospace engineer for nine years and is a member of the company's Deferred Profit-Sharing Plan (DPSP).
What is its stock symbol : What is its Stock Symbol? What was their 2007 Stock Price? What was the lowest Financial Crisis Price (low price in 2008 or 2009)?
Portfolio equally invested in risk-free asset : You own a portfolio equally invested in a risk-free asset and two stocks. what must the beta be for the other stock in your portfolio?
Evaluate portfolio insurance strategy for stock portfolio : Define and evaluate a portfolio insurance strategy for a stock portfolio currently worth $10 million.
Instacart need to sell to prefer best efforts offering : How many shares does Instacart need to sell to prefer the best efforts offering?
Expected future cash flows : How does one determine the value of any asset whose value is based on expected future cash flows?
Calculate the weights to invest in each stock : Calculate the weights to invest in each stock in order to have a portfolio with minimum variance with a return expected of 12%.

Reviews

Write a Review

Financial Management Questions & Answers

  What is present value of all three future benefits

what is the present value of all three future benefits?

  Why construct financial forecasts

Why construct financial forecasts?

  Diagram illustrating what the set of efficient portfolios

Within a CAPM framework, draw a diagram illustrating what the set of efficient portfolios would look like if you are only allowed to lend,

  Use of debt within the capital structure selected by firm

Which one of the following is the risk arising from the use of debt within the capital structure selected by a firm?

  What is the company target debt to equity ratio

If Rio National Inc. issued new securities in the same proportion as its target capital structure, what is the company’s target debt to equity ratio?

  Describe the ratio and what does the ratio measure

Choose a financial ratio that applies to the Income Statement (eg Return on Sales, EBITDA, etc.). Describe the ratio. What does the ratio measure? Is a large number good or bad? How is it trending

  Both bonds make annual payments

Bond P is a premium bond with a coupon rate of 8.6 percent. Bond D is a discount bond with a coupon rate of 4.6 percent. Both bonds make annual payments, have a YTM of 6.6 percent, and have eleven years to maturity. What is the current yield for bond..

  Recapture of net working capital at the end of project

The recapture of net working capital at the end of a project will A. increase terminal year free cash flow by the change in net working capital times the corporate tax rate OR B. increase terminal year free cash flow OR C. decrease terminal year free..

  Determined solely by financial characteristics

A firm's business risk is determined solely by the financial characteristics of its industry. Other things held constant, which of the following events would be most likely to encourage a firm to increase the amount of debt in its capital structure?

  What the rate each party will pay and receive from dealer

Explain how the following scenarios should be resolved: Murrays can borrow money at a fixed rate of 10.5 percent or a variable rate set at prime plus 2.25 percent. Fred’s can borrow money at a variable rate of prime plus 1.5 percent or a fixed rate o..

  Compute the cost of capital for the firm

Individual or component costs of capital) Compute the cost of capital for the firm for the following: A bond that has a $1,000 par value (face value) and a contract or coupon interest rate of 10.8 percent. Interest payments are $54.00 and are paid se..

  Distinguishing between diversity and inclusion is essential

Distinguishing between diversity and inclusion is essential. Having an understanding of inclusion practices can help enhance cultural diversity.

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