A company has five stock in the portfolio and portfolio beta= 1.8, each stock has equal weight and the total value of the portfolio=250,000 tk. One month later, finance manager decided to sell 4th stock and replaced by a new stock which value =70000 tk and new stock beta =1.60, calculate the portfolio new beta.

A company has five stock in the portfolio and portfolio beta= 1.8, each stock has equal weight and the total value of the portfolio=250,000 tk. One month later, finance manager decided to sell 4th stock and replaced by a new stock which value =70000 tk and new stock beta =1.60, calculate the portfolio new beta.

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter8: Risk And Rates Of Return

Section: Chapter Questions

Problem 10PROB

See similar textbooks

Similar questions

Port Inc. has a 2-stock portfolio with a total value of $100,000. $40,000 is invested in Stock A with a beta of 0.85 and the remainder is invested in Stock B with a beta of 1.60. What is his portfolio’s beta? 1.42 0.98 1.26 1.11 1.30
An investor has portfolio of shares consisting of P2,500 investment in each of twenty different ordinary shares. The portfolio beta is equal to 3.00. The investor decided to sell one of shares that has an average beta, for P2,500 and used all the proceeds to buy different share of a telecom company whose beta is 2.00. What will be the new beta of the portfolio?
Compute for the following problems. Show your solution. 1. Assume you buy 100 shares of stock at Php40 per share on margin (40 percent). If the price rises to Php55 per share, what is your percentage gain on the initial equity? 2. In problem 1, what would the percentage loss on the initial equity be if the price had decreased to Php28? 3. In 2015 Carlo Elise have several stocks that make-up his portfolio. Stock A with a price of P275.50 and shares outstanding of 2,500, for Stock B with a market value of P140,625.00 with 1,500 shares, for Stock C that has a market value of P279,450.00 at P155.25 and Stock D that has 150 shares outstanding with a market price of P475.00. In 2016, shares prices of Stock A and D go up by 20% while the others go down by a similar rate with additional purchase of 500 and 750 stocks for B and C respectively except for stock E that stays the same with a market value of P138,125 at 2,500 shares. a. How much is the total market value of the index for 2015?…
Suppose you purchase one share of the stock of Volatile Engineering Corporation at the beginning of year 1 for $36. At the end of year 1, you receive a $2 dividend and buy one more share for $30. At the end of year 2, you receive total dividends of $4 (i.e., $2 for each share) and sell the shares for $36.45 each. The dollar-weighted return on your investment is A. 12.35%. B. 4.08%. C. 8.53%. D. -1.75%. E. 8.00%.
The Turnip Company plans to issue preferred stock. Currently, the company’s stock sells for $115. Once new stock is issued, the Turnip Company would receive only $95. The dividend rate is 7.5%, and the par value of the stock is $105. Compute the cost of capital of the stock to your firm. Show all work please.
An investor has diversified portfolio of stocks consisting of P3,000 investment in each of twenty five different common stocks. The portfolio beta is equal to 2.50. The investor decided to sell one of stocks, whose beta is equal to 1.00, for the same investment cost and used all the proceeds to buy different stock of a manufacturing company whose beta is 1.50. What will be the new beta of the portfolio? (No rounding off until the final answer) 2.52 2.05 2.12 2.88
Suppose that you just purchased 250 shares of Beta Banana’s stock for $70 per share. The initial margin requirement is 70.0%, which means the amount borrowed is $5,250. The corresponding balance sheet is below: Assets Liabilities and Equity Stock $ 17,500.00 Loan from broker $ 5,250.00 Equity $ 12,250.00 Total assets $ 17,500.00 Total liabilities and equity $ 17,500.00 Required: a. Now suppose the price of the stock falls to $41 per share. What is your current margin percentage? (Round your answer to 2 decimal places.) b. Construct the balance sheet to show the current situation. c. If the maintenance margin is 50%, at what stock price would you get a margin call? (Round your answer to 2 decimal places.)
An investor has diversified portfolio of stocks consisting of P3,000 investment in each of twenty five different common stocks. The portfolio beta is equal to 2.50. The investor decided to sell one of stocks, whose beta is equal to 1.00, for the same investment cost and used all the proceeds to buy different stock of a manufacturing company whose beta is 1.50. What will be the new beta of the portfolio? (No rounding off until the final answer) a. 2.52 b. 2.12 c. 2.88 d. 2.05
Donald Gilmore has $100,000 invested in a 2-stock portfolio. $35,000 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 1.50 and Y's beta is 0.70. What is the portfolio's beta?
Donald Gilmore has $100,000 invested in a 2-stock portfolio. $77,500 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 1.50 and Y's beta is 0.70. What is the portfolio's beta? Select the correct answer. a. 1.26 b. 1.28 c. 1.30 d. 1.34 e. 1.32
The stock of Suncor Energy is currently trading for $36 per share. An investor expects the stock price to move up in the next two months, and decided to invest $7, 200 in this stock. If the investor invests all the money in the stock, how much is the profit or loss if the stock price in two months turns out to be i) 40 or ii) 32? If the investor invests all the money in call options with a strike price of $35 and price of the call is $2 per share, how much is the profit or loss if the stock price in two months turns out to be i) 40 or ii) 32?