What is the beta of the portfolio

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Reference no: EM132006517

1. The expected rates of return for Stocks A, B, and C are .04, .10, and .12 respectively. The risk free rate is .03 and the market risk premium is .08. If you invest $3,000, $6,000, and $3,000 in Stocks A, B, and C respectively, what is the beta of the portfolio? Assume that the three stocks are priced in equilibrium.

a. 1.0

b. .75

c. .80

d. .70

2. Ten years ago PPO Co. issued bonds with a maturity of 15 years, a coupon rate of 8% paid semi-annually, and a par value of $1,000. Today, the market interest rate on these bonds is 8%. What is the expected price of the bonds today?

a. $1,000

b. $1,100

c. $900

d. $870

e. $910

Reference no: EM132006517

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