5. Portfolio Beta Portfolio beta can be computed in the same way as portfolio return was computed. If stock A had a beta of 1.5 and stock B had a beta of -0.60, the beta of a portfolio comprised of both these stocks would be: Portfolio beta = WABA + WBBB = 0.3 (1.5) + 0.70 (-0.6) = 0.45 + (-0.42) = 0.03 %3D The Excel application is also similar to how it was for potfolio return. Since you know the result for portfolio beta already (0.03), try and obtain it again in Excel. Note: There is no need to compute the beta of the market. It is 1 by default

Q: The use of financial leverage to enable returns on equity investments is a common characteristic of ...

A: Financial leverage is the use of debt to acquire additional assets or fund activities. Because lever...

Q: 2-year zero coupon bond has a face value of £100 and a price of £92. A three year zero coupon bond h...

A: Zero coupon bond do not have any coupon and they are traded at discount and cash out on face value o...

Q: A research and development project at your company has a 40% chance of producing a breakthrough wort...

A: Expected Value is determined when various values can be created or provided by a project to have a s...

Q: The prices of several bonds with face values of $1,000 are summarized in the following table: . For ...

A: If bonds sell at less than its face values it trades at a discount. If bonds sell at its face values...

Q: Bobby has heard the importance of saving early for retirement. He wants to retire in 35 years. But h...

A: Here, Monthly Savings (PMT) is $600 Time to Retire is 35 years Time to Start saving is after 20 year...

Q: A company has a possible project and has identified the two major areas of risk as being the inflati...

A: To Find: Probability that the project will have a negative NPV

Q: what is the estimated cost of ordinary equity?

A: Cost of ordinary equity refers to the cost incurred by the company for issuing new ordinary equity. ...

Q: What is the value of the bond?

A: Bond valuation refers to a method which is used to compute the current value of future cash flow of ...

Q: The current zero-coupon yield curve for risk-free bonds is as follows: . What is the price per $100 ...

A: YTM for maturity 2 years (r) = 5.47% n = 2 years Face value (F) = $100

Q: Halliford Corporation expects to have earnings this coming year of $3.325 per share. Halliford plans...

A: The Dividend Growth Model: The dividend growth model recognizes that dividends are the cash flows to...

Q: need help with answering question B: A car loan offered by Bank One requires quarterly payments and ...

A: B: We will have to determine the EAR (effective annual rate) in each case and then select the option...

Q: Based on the balance sheet, Is the market price of the company’s stock going up or down? Explain.

A: Market price of the stock depends upon dividend, growth rate and required rate of return

Q: 0. Devon takes out a loan of $1,500, at  5 1 2%  simple interest, for 53 months. What is the maturi...

A: Maturity value can be calculated by using this equation  Maturity value =Principal*(1+rate*time)

Q: An IOU agreement was made between two persons. For a face value of P100,000, it was agreed that the ...

A: A bond is an instrument that obligates the issuer to pay the buyer pre-determined interest. The bond...

Q: As the investment manager, you are faced with the problem of choosing between two investment project...

A: Here,

Q: 7. Carlos Primero is a 30-year old employee earning P400,000 per annum. He intends to retire at the ...

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question s...

Q: Raglan Stores PLC has grown rapidly since its stock market flotation five years ago. Despite its rap...

A: Given that  Company's share =  80∈ million Outstanding Shares=200∈ million EPS (Earning per Share)=4...

Q: nery worth $80 million and a net working capital of $20 million. The entire outlay will be incurred...

A: Capital budgeting is the procedure through which a corporation examines potential large projects or ...

Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery w...

A: Cashflows means movement of cash. Cash movement can be positive and negative. Positive movement mean...

Q: 4. Stock Values Poulter Corporation will pay a dividend of $3.25 per share next year. The company pl...

A: Next dividend (D1) = $3.25 Growth rate (g) = 5.1% r = 11%

Q: Market value analysis) The balance sheet for Larry Underwood Motors shows a book value of stockholde...

A: Given, Book value of equity $1391000 Net income 505,000 EPS 0.232 per share PE ratio is 20.54  

Q: (Related to Checkpoint 5.2) (Future value) To what amount will $4,800 invested for 9 years at 9 perc...

A: Present value = $4800 Interest rate = 9% Period = 9 Years

Q: In 2012, a certain company estimates that phones sales will increase by 50% for their C005 model and...

A: The sales of the company grow by the certain percentage that may change depending on the environment...

Q: You are a manager at Percolated​ Fiber, which is considering expanding its operations in synthetic f...

A: Here, Cost of Capital is 10% Cost of the Equipment is $19,000,000 Working Capital is $7,000,000 Part...

Q: Find the present value of interest tax shields generated by these three debt issues. Consider corpor...

A: Interest is paid on the loan amount taken by the borrower. Interest expense reduces the net profit a...

Q: 6. A sari-sari store vendor buys some goods from a dealer who asks P15,950 at the end of 180 days. T...

A: Hi! Thank you for the question, As per the Honor Code, we are allowed to answer one question in case...

Q: 15. Compute the principal (in $) for the loan. Use ordinary interest when time is stated in days. P...

A: The principal amount can be calculated with the help of simple interest function

Q: If Marc obtained a business loan of $225,000 at 4.77% compounded semi-annually, how much should he p...

A: Solution:- When a loan is taken, it is either paid back in lump sum mode or installments. In install...

Q: Red Company has a profit margin of 15 percent on sales of $20,000,000. If the firm has a debt of $7,...

A: Solution:- Return on Total Assets ratio measures that how much net income does the company earn on i...

Q: Company XYZ does not currently pay a dividend. However, their earnings have been growing at a very h...

A: Given:- First Dividend$ 6.9 per share  The dividend is then expected to grow at 20 % per year for 6...

Q: Suppose that your parents decide tổ make deposits into a savings account, With the first deposit bei...

A: Given,on the child 18th birthday, Annual withdrawal = $2000, $2,400, $2,800, $3,200Annual Interest r...

Q: new project paying yment renuu payments of 250,000$ starting from the end of 1st year. On the beginn...

A: The term "annuity" refers to an insurance contract created and distributed by financial organisation...

Q: Describe payday loans, tax-refund advances and structured-settlement advances—the  differences betwe...

A: Payday loans are also sometimes known as cash advances. These are unsecured loans with maturity peri...

Q: You plan to buy a common stock and hold if tor one year. You expect to receive both ₱150 and ₱260 fo...

A: Expected amount to be received after 1 year = P 150 and P 260 with equal probability r = Required re...

Q: The current beta for The Garner Company is 1.6. The risk-free rate of return is 3%, whereas the mark...

A: Current beta = 1.6 Risk free rate (Rf) = 3% Market risk premium (Rm - Rf) = 7%

Q: J&J Inc. has decided to issue new stock to raise $9,000,000 to expand its operations. J&J currently ...

A: Data given: Net income = $4.1 million No. of common shares outstanding = 2.6 million Fund to be rais...

Q: GT Cap. Corp. will be issuing 5-year P20,000,000-face value bonds at an issue price equal to face. I...

A: The cost which the issuer of bonds need to pay before considering taxation benefit is called the YTM...

Q: The option is currently a.) In-the-money b.) At-the-money c.) Out-the-money 2.) In/At/Out- the m...

A: The call option give opportunity to buy the currency at the specified price and at specific date but...

Q: a The value of an investment account has a doubling time of 13 years and $35,000 was originally depo...

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one...

Q: Sammie Jo wants to begin saving for her retirement in 35 years. She researched and found an annuity ...

A: The future value is equal to the sum of the future cash flows multiplied by the future value factor ...

Q: The shares of AMC plc are currently quoted at 200p per share and the company has been paying a divid...

A: Note: All the Above Mentioned Given Options are incorrect, so we are solving for the correct solutio...

Q: A growing business moved to a new building to service a bigger client pool. The building acquired th...

A: Cost of Building is ₱3,000,000 Interest Rate is 12% Time Period is 5 years Compounding Period is Mon...

Q: Discuss the importance of the role of a wealth manager professional in the context of protecting the...

A: Financial planning, investment portfolio management, and a number of aggregated financial services a...

Q: Based on the given information, how much is the weighted average cost of capital?

A: Market value of ordinary shares = P 5 million Market value of long term debt = P 6.25 million Total ...

Q: 5. Determine the number of days of the loan. Loan Date Due Date Number of Days March 8 July 22

A: Loan date = March 8 Due date = July 22

Q: Determine the maturity date of the loan (not in a leap-year). Loan Date Time of Loan (days) Maturit...

A: Loan date = Feb 8 Loan duration = 110 days As it is not a leap year, Feb has 28 days

Q: Here is Miguel's credit card statement for the month of November. Transaction Date Transaction amoun...

A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for yo...

Q: If the stated annual rate of interest compounded semi-annually is 12.5% then what is the equivalent ...

A: Interest rate (APR) = 12.5% Number of compounding per year (m) = 2  

Q: payments are deferred for 10 years? $129.43 $319.42 $305.21 $300.21

A: Monthly payment that can be withdrawn depends on interest rate and period of withdrawal and deferral...

Q: Larry owed Rusty a $3,000 debt that is past due. In a telephone conversation, Kathy orally promised ...

A: There are laws governing the financial transactions and these must be written only and any oral thin...

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.