Portfolio new beta be after transactions

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Question 1: Suppose rRF = 6%; rM = 10%; and rA = 14% a. Calculate Stocks A's beta. b. If Stock A's beta were 2.0, then what would be A's new required rate of return?

Question 2: XYZ Corporation's bonds have 14 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. The bonds sell at a price of $950. What is their yield to maturity? Show your work.

Question 3: You have a $4 million portfolio consisting of a $100,000 investment in each of 20 different stocks. The portfolio has a beta of 1.1. You are considering selling $100,000 worth of one stock with a beta of 0.9 and using the proceeds to purchase another stock with a beta of 1.4. What will the portfolio's new beta be after these transactions? Show your work.

Reference no: EM132432729

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