Homework Help is Here – Start Your Trial Now!
Business
Finance
Suppose you have a portfolio that has. $120 in stock A with a beta of 1.06, $480 in stock B with a beta of 0.63, and $360 in the market portfolio. You have another $240 to invest. You wish to achieve a beta for your whole portfolio to be the same as the risk- free asset. What is the beta of the added security? The beta of the added security is Note: Please retain at least 4 decimal places in your calculations and at least 2 decimal places in your final answer.

Suppose you have a portfolio that has. $120 in stock A with a beta of 1.06, $480 in stock B with a beta of 0.63, and $360 in the market portfolio. You have another $240 to invest. You wish to achieve a beta for your whole portfolio to be the same as the risk- free asset. What is the beta of the added security? The beta of the added security is Note: Please retain at least 4 decimal places in your calculations and at least 2 decimal places in your final answer.

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter2: Risk And Return: Part I
Section: Chapter Questions
Problem 12P: Stock R has a beta of 1.5, Stock S has a beta of 0.75, the expected rate of return on an average...
See similar textbooks
icon
Related questions
Question

F1

Suppose you have a portfolio that has. $120 in stock A with a beta of 1.06, $480 in stock B with a beta of 0.63, and $360 in the market portfolio. You have another $240 to invest. You wish to achieve a beta for your whole portfolio to be the same as the risk- free asset. What is the beta of the added security? The beta of the added security is Note: Please retain at least 4 decimal places in your calculations and at least 2 decimal places in your final answer.
Transcribed Image Text:Suppose you have a portfolio that has. $120 in stock A with a beta of 1.06, $480 in stock B with a beta of 0.63, and $360 in the market portfolio. You have another $240 to invest. You wish to achieve a beta for your whole portfolio to be the same as the risk- free asset. What is the beta of the added security? The beta of the added security is Note: Please retain at least 4 decimal places in your calculations and at least 2 decimal places in your final answer.
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Investment in Stocks
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Intermediate Financial Management (MindTap Course…
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Corporate Fin Focused Approach
Corporate Fin Focused Approach
Finance
ISBN:
9781285660516
Author:
EHRHARDT
Publisher:
Cengage
SEE MORE TEXTBOOKS