Using the proceeds to purchase another stock with beta

Assignment Help Financial Management

Reference no: EM131050302

You have a $2 million portfolio consisting of a $100,000 investment in each of 20 different stocks. The portfolio has a beta of 1. You are considering selling $100,000 worth of one stock with a beta of 0.8 and using the proceeds to purchase another stock with a beta of 1.3. What will the portfolio's new beta be after these transactions? Do not round intermediate calculations. Round your answer to two decimal places.

Reference no: EM131050302

Questions Cloud

What is the income statement : What is the income statement? What is found on the income statement? Pick an account and talk about what might be included in the account.

Suppose the shares of ucantpurchase are not traded : Suppose the shares of UCANTPURCHASE are not traded. Using options and lending, you can create a portfolio that would produce the same payoffs of a long position. What would the combination be comprised of to replicate the payoff? PLEASE EXPLAIN IN DE..

Will you have enough money in a year to purchase the trip : Your parents have given you $1,200 a year before your graduation so that you can take a trip when you graduate. You wisely decide to invest the money in a bank CD that pays 6.83 percent interest. You know that the trip costs $1,233 right now and that..

What is a balance sheet : What is a balance sheet? What is found on a balance sheet? Pick one of the account types, define and discuss what might be included in the account.

Using the proceeds to purchase another stock with beta : You have a $2 million portfolio consisting of a $100,000 investment in each of 20 different stocks. The portfolio has a beta of 1. You are considering selling $100,000 worth of one stock with a beta of 0.8 and using the proceeds to purchase another s..

What is an expense in healthcare organization : What is an expense in healthcare organization? On which financial statements are expenses recorded? What is one of the largest expenses in a healthcare organization? Please cite your references

Describe the severity of the impact to the final project : Based on your knowledge of the project and the data generated so far that applies to these high-risk factors, who would need to be informed of these potential changes and how would you inform them?

Steps of the nine-step assessment process : Apply the final three steps of the nine-step assessment process to develop a 750-word analysis of your chosen company:

What is the required rate of return on portfolio consisting : You have observed the following returns over time: Year Stock X Stock Y Market 2009 12% 11% 10% 2010 19 5 9 2011 -15 -8 -12 2012 5 1 1 2013 20 13 13. What is the beta of Stock Y? What is the required rate of return on Stock Y? What is the required ra..

User Account

All Pages