What is beta of the portfolio of two assets

Assignment Help Financial Management
Reference no: EM132036837

Suppose that the market consists of only 2 stocks. Stock 1 has the market capitalization (ag- gregate stock market value of its shares) of $50 million and ? of 0.85. Stock 2 has the market capitalization of $75 million. What is stock 2 ??

Hint 1: What is beta of the market portfolio?

Hint 2: What is beta of the portfolio of two assets?

Reference no: EM132036837

Questions Cloud

What is the net present value of the acquisition to company : Calculate, per Brealey, Myers and Allen parlance, the COST of the acquisition. What is the Net Present Value of the Acquisition to Company X?
The stock undervalued or overvalued : What is the fair market price of its stock today? If the current market price is $ 26.50, is the stock undervalued or overvalued?
Assume the market is in equilibrium with the required return : what is the value of the stock today (assume the market is in equilibrium with the required return equal to the expected return)?
What was dollar return and percent return : If you owned 950 shares of Sprint, what was your dollar return and percent return?
What is beta of the portfolio of two assets : What is beta of the market portfolio? What is beta of the portfolio of two assets?
What profit or loss would the investment banker : What profit or loss would the investment banker incur if the issue were sold to the public at an average price of $24 per share?
The beta of the market portfolio : The beta of the market portfolio (Bm) is:
Calculate the non-operating terminal year cash flow : What is the cash outflow at Time 0? Calculate the non-operating terminal year cash flow.
Calculate the weighted average cost of capital : The after tax cost of debt is 12% and that of equity is 18%. Calculate the weighted average cost of capital:

Reviews

Write a Review

Financial Management Questions & Answers

  What is this employee benefit worth to you today

Your employer contributes $50 a week to your retirement plan. Assume that you work for your employer for another 20 years and that the applicable discount rate is 9 percent. Given these assumptions, what is this employee benefit worth to you today?

  Dividends are expected to grow at a constant rate

The Starr Co. just paid a dividend of $1.10 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year, indefinitely. Investors require a return of 11 percent on the stock. What is the current price? Current p..

  Types of insurance should he consider dropping

Bruce’s 2003 Chevrolet Malibu is pretty old now, and its resale value is low. Since he is always interested in saving insurance premium dollars when appropriate, which of the following types of insurance should he consider dropping??

  Paid out half of its earnings as dividends company

The company must have had zero net income in 2015 company must have paid out half of its earnings as dividends company must have paid no dividends in 2015.

  What are the main shortcomings of the payback method

Why does the payback period provide a measure of a project’s liquidity risk? What are the main shortcomings of the payback method?

  Find the arbitrage-free forward price of corn

The spot price of corn is $2.24 per bushel. The risk-free interest rate is 5% nominal annual compounded every two months. The storage costs for corn are $0.03 per month per bushel, paid at the end of each month. Find the arbitrage-free forward price ..

  National or central banks are the lenders of last resort

National or “Central” Banks are the ‘Lenders of Last Resort.’ What is the importance of being the Lender of Last Resort?

  About the bond valuation

(Bond Valuation) Crawford Inc. has two bond issues outstanding, both paying the same annual interest of $85, called Series A and Series B. Series A has a maturity of 12 years, whereas Series B has a maturity of 1 year. What would be the value of each..

  Traditional method of allocation tax regulation section

Assume that ABC uses the “traditional method” of allocation under Tax Regulation Section 1.704-3(b).

  Exposure to fluctuations in the value of the euro

Explain one way the company could reduce its exposure to fluctuations in the value of the euro.

  Unfunded non qualified deferred compensation plan

Which of the following characteristics of an unfunded non qualified deferred compensation plan?

  What are project discounted payback-NPV-IRR

What are the project’s discounted payback, NPV, IRR, and MIRR?

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