Calculate the market portfolio, Marketing Management

Assignment Help:

(a)   Since APPL and MSFT account for the entire large cap technology component of S&P 500 and their proportion of index is based on their weights, this large cap technology sector is 5% (3% + 2%) or 0.05 of the total portfolio.  

(b)  The beta of the large cap technology sector can be determined as follows.

Portfolio beta = ∑Wiβi

In the current case, the portfolio is large cap technology sector where AAPL occupies 3/5 weight and MSFT occupies 2/5 weight of the portfolio. With the given betas,

Portfolio beta = (3/5)*1.04 + (2/5)*1.05 = 0.624 + 0.42 = 1.044

The beta of this large cap technology sector is 1.044.

(c)   The beta of the market portfolio is generally 1. Since the S&P 500 is the market portfolio, its beta is 1.

(d)  The weight or fraction of the remaining stocks in S&P is 1 - 5% = 95%. With the formula in (b), the combined beta of these two stocks is

Beta = 0.03*1.04 + 0.02*1.05 = 0.0522

Portfolio beta = 1

Hence beta of remaining stocks = 1 - 0.0522 = 0.9478

The beta of the remaining stocks in the S&P is 0.9478.


Related Discussions:- Calculate the market portfolio

Video games, considering the concept of product life cycle, where would you...

considering the concept of product life cycle, where would you put video games in thir life cycle?

What is financing in functions of marketing, What is financing in functions...

What is financing in functions facilitating exchange? Financing: Financing and marketing both functions of a business are interlinked along with each other. The department

Matrix, how to create a 8*15 matrix by a5*6 and a 2*45 matrices in matlab

how to create a 8*15 matrix by a5*6 and a 2*45 matrices in matlab

Markets, Markets The concepts of relationships and exchange lead to th...

Markets The concepts of relationships and exchange lead to the concept of a market. A market is the set of real and potential purchaser of a product. 1). originally a "mark

Algebra 2, the cost of renting a canoe is $20 dollars for the first 4 hours...

the cost of renting a canoe is $20 dollars for the first 4 hours and $3 per hour for additional hours. Sketch a graph of the cost of renting a canoe from 0 to 8 hours. Then write a

FINANCIAL MANAGEMENT, explain cash flow and funds flow with suitable exampl...

explain cash flow and funds flow with suitable example from existing corporate entity for at least three years .i.e..,2008, 2009, 2010.

What is message control, Message Control Control over the message is e...

Message Control Control over the message is essential to ensure that intended message is transmitted to and received by the target audience. Moreover, this message should be c

How does green marketing lead to innovation, Question: (a) List and di...

Question: (a) List and discuss with examples the four factors that influence consumer purchase decision. (b) To what extent ‘branding' is important for a product and ho

Write Your Message!

Captcha
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