Given $100,000 to invest, construct a value-weighted portfolio of the four stocks listed below. icon in order to copy its contents into a spreadsheet.) Stock Golden Seas Jacobs and Jacobs MAG PDJB Price/Share ($) 11 23 47 13 Stock Golden Seas BIEB Number of Shares Outstanding (millions) Enter the portfolio weight below: (Round to two decimal places.) % of Total Value (portfolio weight) 1.04 1.32 29.11 14.51

Given $100,000 to invest, construct a value-weighted portfolio of the four stocks listed below. icon in order to copy its contents into a spreadsheet.) Stock Golden Seas Jacobs and Jacobs MAG PDJB Price/Share ($) 11 23 47 13 Stock Golden Seas BIEB Number of Shares Outstanding (millions) Enter the portfolio weight below: (Round to two decimal places.) % of Total Value (portfolio weight) 1.04 1.32 29.11 14.51

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter8: Risk And Rates Of Return

Section: Chapter Questions

Problem 10PROB

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Assume that you’ve just inherited $500,000 and have decided to invest a big chunk of it ($350,000, to be exact) in common stocks. Your objective is to build up as much capital as you can over the next 15 to 20 years, and you’re willing to tolerate a “good deal’’ of risk. What types of stocks (blue chips, income stocks, and so on) do you think you’d be most interested in, and why? Select at least three types of stocks and briefly explain the rationale for selecting each. Would your selections change if you were dealing with a smaller amount of money—say, only $50,000? What if you were a more risk-averse investor?
Given $100,000 to invest, construct a value-weighted portfolio of the four stocks listed below. (Click on the following icon in order to copy its contents into a spreadsheet.) Stock Price/Share ($) Number of Shares Outstanding (millions) Golden Seas 13 1.21 Jacobs and Jacobs 23 1.2 MAG 41 32.87 PDJB 12 9.76
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Find the following for the indicated mutual fund when the given number of shares is bought and sold 1 year later after receiving the distribution shown in the following table. (Round your answers to two decimal places.) Name Shares Bought Shares Sold Distribution NorthCo 300 at $85 300 at $90 $1.15 per share (a) Find the capital appreciation. ____________%(b) Find the yield. _____________%(c) Find the return. _____________%
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Suppose a stock index contains the stock of 3 firms: A, B and C. The stock prices for the three firms are $30, $21 and $39, respectively. The firms have 98 million, 127 million and 130million shares outstanding, respectively. If the index is value-weighted, calculate its initial value.
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Brandon is an analyst at a wealth management firm. One of his clients holds a $10,000 portfolio that consists of four stocks. The investment allocation in the portfolio along with the contribution of risk from each stock is given in the following table: Stock Investment Allocation Beta Standard Deviation Atteric Inc. (AI) 35% 0.750 23.00% Arthur Trust Inc. (AT) 20% 1.500 27.00% Li Corp. (LC) 15% 1.100 30.00% Transfer Fuels Co. (TF) 30% 0.500 34.00% Brandon calculated the portfolio’s beta as 0.8775 and the portfolio’s expected return as 8.83%. Brandon thinks it will be a good idea to reallocate the funds in his client’s portfolio. He recommends replacing Atteric Inc.’s shares with the same amount in additional shares of Transfer Fuels Co. The risk-free rate is 4%, and the market risk premium is 5.50%. According to Brandon’s recommendation, assuming that the market is in equilibrium, how much will the portfolio’s required return change? (Note: Round your…