The total dollar value and weight of each share

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Mili shares with you the following information regarding his investment portfolio:

Investment in four shares: CFL, ATH, FTV & KFL.

  • Total portfolio is worth $100,000.
  • Investment in ATH is half the size of CFL.
  • Investment in FTV is half the size of ATH.
  • Investment in KFL is half the size of FTV.
  • Weighted Beta of CFL and KFL are 0.35 and 0.55 respectively.
  • Market is 0.15 more risky and 0.15 less risky for FTV and ATH shares respectively.

Calculate:

a. The total dollar value and weight of each share in Mili's portfolio.

b. Beta of CFL.

c. Beta of KFL.

d. Weighted beta of ATH.

e. Weighted beta of FTV.

f. The portfolio's weighted beta.

g. Mili adds to her current portfolio shares of RBG worth of $10,000. Recalculate the portfolios new weighted beta and briefly explain the impact RBG share purchases has on the risk structure of Mili's portfolio? RBG shares has a beta of 2.3.

Reference no: EM132528098

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