Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different common stocks. The portfolio's beta is 1.26. Now suppose you decided to sell one of the stocks in your portfolio with a beta of 1.0 for $7,500 and use the proceeds to buy another stock with a beta of 2.18. What would your portfolio's new beta be? Do not round intermediate calculations. Round your answer to two decimal places.

Q: An analyst has modeled the stock of a company using the Fama-French three-factor model. The market…

A: Computation:

Q: The Blackwell mutual fund has a stock portfolio that are consists of the following companies. Stock…

A: Beta It helps to measure the stock volatility related to an overall market. It is computed in order…

Q: Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different…

A: Portfolio consists off = 20 stocks Investment of each stock = $7,500 Portfolio beta = 0.95 Selling…

Q: our investment club has only two stocks in its portfolio. $15,000 is invested in a stock with a beta…

A: Portfolio Beta is the weighted average beta of individual stock  Weight of stock 1 = 15000 /…

Q: Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different…

A: The term portfolio beta refers to the measure of the riskiness of the whole portfolio in relation to…

Q: Suppose you held a diversifed portfolio consisting of a $7.500 investment in each of 20 different…

A: Here, Portfolio Beta is 1.25 Individual Investment in 20 different stock si $7,500 Number of…

Q: Suppose you hold a diversified portfolio consisting of a $7,500 investment in each of 20 different…

A: Portfolio beta can be calculated by using this equation. Portfolio beta =weight of stock 1*portfolio…

Q: An individual has $30,000 invested in a stock with a beta of 0.6 and another $50,000 invested in a…

A: Introduction: The term portfolio beta refers to a metric which is used in calculating the overall…

Q: An individual has $36000 invested in Stock A with a beta of 1.1 and another $35000 invested in Stock…

A: Stock A investment = 36000 Stock B investment =35000 Stock A beta =1.1 Stock B beta =1.4 Total…

Q: Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different…

A: Portfolio beta can be calculated by multiplying the weight of the stock with a respective beta.…

Q: Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different…

A: A portfolio beta is a measure of the systematic risk of a portfolio of investments.

Q: Your portfolio consists of115 shares of CSH and 75 shares of​ EJH, which you just bought at $22and…

A: A portfolio is made of different stocks. The portfolio return depends upon the individual returns…

Q: Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different…

A: Given information: Initial portfolio’s beta is 1.81 Investment in diversified portfolio is $7,500 in…

Q: Suppose you hold a diversified portfolio consisting of a $4,000 investment in each of 14 different…

A: Given: Amount invested one stock = $4,000 Total amount = 14 * $4,000 = $56,000 Portfolio beta = 1.30…

Q: Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different…

A: The portfolio beta can be computed as sum of betas of stock divided by the number of stocks.

Q: stor holds a diversified portfolio with a beta equal to 1.2, consisting of a P1,000 investment in…

A: Beta of portfolio is weighted average beta of all stocks in the portfolio.

Q: You are a financial investor who actively buys and sells in the securities market. Now you have a…

A: Given  Investment in A = $7500 Investment in B = $4800 Investment in C = $5700 Investment in D =…

Q: weights of the assets in your portfolio

A: Note: Since you have posted a question with multiple sub-parts, we will solve the first three…

Q: ou are an active investor in the securities market and you have established an investment portfolio…

A: Capital gain is determined by deducting the initial value of stock or asset from the net proceeds of…

Q: what is the new beta of the investment portfolio?

A: Weighted portfolio beta = Weight of stock1*Beta of stock1 + Weight of stock2*Beta of stock2 + Weight…

Q: Assume that you hold a well-diversified portfolio that has an expected return of 11.0% and a beta of…

A: The expected return and beta of portfolio is a weighted calculation of existing portfolio and the…

Q: You have a portfolio with a beta of 1.29. What will be the new portfolio beta if you keep 94 percent…

A: Beta: It is a numerical value which evaluates the variations of a stock to shifts in the stock…

Q: You have a portfolio with the following:   Stock Number of Shares Price Expected Return W 1,000…

A: Portfolio is a bundle of different investments. Investor invest the money in different investment to…

Q: You have a portfolio with a beta of 1.30. What will be the new portfolio beta if you keep 84 percent…

A: Portfolio Beta is calculated by doing weighted average of the Beta of the individual investment…

Q: Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different…

A: A group of financial assets such as stocks, bonds, commodities, cash, and cash equivalents, as well…

Q: An analyst has modeled the stock of a company using the Fama-French three-factor model. The market…

A: Market return is 12% return on the SMB portfolio (rSMB) is 2.1%  return on the HML portfolio (rHML)…

Q: Suppose that your estimates of the possible one-year returns from investing in the common stock of…

A: A statistical measure that represents the variation in the return on the stock is term as the…

Q: Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different…

A: portfolio beta formula: βportfolio=∑i=1nwi×βiwhere,wi= weight of ithstockβi=beta of ithstockn = no…

Q: You have a portfolio with a beta of 1.59. What will be the new portfolio beta if you keep 86 percent…

A: Beta: It is a numerical value which evaluates the variations of a stock to shifts in the stock…

Q: You hold a diversified portfolio consisting of a $10,000 investment in each of 20 different common…

A: Beta of the portfolio = 1.2 Each of 20 stocks has an investment of $10000 Total investment = $200000…

Q: The Blackwell mutual fund has a stock portfolio that are consists of the following companies. Stock…

A: stock proportional in the portfolio beta Gazprom 0.25 1.4 Shell 0.3 1.6 Exxon Mobil 0.3 1.5…

Q: Suppose you buy 500 shares of Ford at $11 per share and 100 shares of Citigroup stock at $28 per…

A: Portfolio is a composition of various stocks selected by analyzing the risk and return of each…

Q: Assume that you hold a well-diversified portfolio that has an expected return of 8.02% and a beta of…

A: Initial Portfolio Expected Return = 8.02% Beta = 0.99     Alpha Corporation Value = Number of shares…

Q: Willis currently has $190,000 invested in a four-stock portfolio with a beta coefficient equal to…

A: Portfolio beta before stock sale (BP)  = 1.50 Portfolio value (P) = $ 190,000 Value of sold stock…

Q: Your investment club has only two stocks in its portfolio. $25,000 is invested in a stock with a…

A: Portfolio refers to a bunch of securities . Beta refers to the systematic risk means the risk which…

Q: Suppose you held a diversified portfolio consisting of a $7,500 investmentin each of 20 different…

A: given, number of stock = 20 probability of each stock = 1/20 price of each stock = $7500 value of…

Q: Consider the following two scenarios for the economy and the expected returns in each scenario for…

A: Beta of Stock = Change in Rate of Return of Stock / Change in Market return Therefore, Beta of Stock…

Q: What will be the expected return and the beta of your portfolio after you purchase the new stock

A: Expected return is the return which is the return which has been expected by the investor to earn…

Q: Your portfolio consists of 100 shares of CSH and 50 shares of EJH, which you just bought at $20 and…

A: Given that: The portfolio consists of 100 shares of CSH and 50 shares of EHJ Purchase price $20and…

Q: Your investment club has only two stocks in its portfolio. $35,000 is invested in a stock with a…

A: Portfolio beta is the weighted average beta of individual stock's beta

Q: On the basis of the two stocks' expected and required returns, which stock would be more attractive…

A: Here,

Q: Tareen investing company invested equal amount in five stocks to form investment portfolio which has…

A: Beta coefficient shows the systematic risk of the assets. The beta factor shows the systematic risk…

Q: An individual has $50,000 invested in a stock with a beta of 0.7 and another $50,000 invested in a…

A: Beta coefficient shows the systematic risk of the assets. The beta factor shows the systematic risk…

Q: Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different…

A: Portfolio refers to a combination or collection of financial instruments or securities being stocks,…

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.