What is the portfolio beta?a. 1.48b. 1.70c. 1.95d. 2.10 Pencil Corp. has an investment fund amounting to P3,000,000. The fun consist of three stocks as follows:|Investment Beta50,000500,0001,000,0001,000,000StockJFC1.211SCCNOWPAL12.3The market required rate of return is 10% while the risk-free rate is 3%

The beta of the portfolio is the weighted average beta of each stock. Return on portfolio and beta…

Answered: What is the portfolio beta? a. 1.48 b.…

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What is the portfolio beta? a. 1.48 b. 1.70 c. 1.95 d. 2.10

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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An investor holds a diversified portfolio with a beta equal to 1.2, consisting of a P1,000 investment in each of 10 different common stocks. He sold one of your stocks that has a beta equal to 0.7 for P1,000. The whole proceeds was used to purchase another stock that has a beta equal to 1.4. Determine the beta of the new portfolio? а. 1.21 b. 1.27 C. 1.32 е. 1.33
Consider the following information and then calculate the required rate of return for the Universal Investment Fund, which holds 4 stocks. The market's required rate of return is 13.25%, the risk-free rate is 7.00%, and the Fund's assets are as follows: Stock Investment Beta A $200,000 1.5 B $300,000 -0.5 C $500,000 1.25 D $1,000,000 0.75
Consider the following information and then calculate the required rate of return for the Global Investment Fund, which holds 4 stocks. The market's required rate of return is 17.50%, the risk-free rate is 3.00%, and the Fund's assets are as follows (Do not round your intermediate calculations.): please show work in excel Stock Investment Beta A $200,000 1.50 B $300,000 -0.50 C $500,000 1.25 D $1,000,000 0.75
Consider the following information and then calculate the required rate of return for the Scientific Investment Fund, which holds 4 stocks. The market's required rate of return is 14 %, the risk-free rate is 6 %, and the Fund's assets are as follows: Stock Investment Beta A $ 200,000 1.50 B 300,000 -0.50 C 500,000 1.25 D 1,000,000 1.1
Consider the following information and then calculate the required rate of return for the Global Investment Fund, which holds 4 stocks. The market's required rate of return is 13.0%, the risk-free rate is 6.00 %, and the Fund's assets are as follows: Stock A B BUD C D 10.58% 11.25% 12.37% 13.18% 13.77% Investment $ 200,000 300,000 500,000 $1,000,000 Beta 2.00 -0.60 1.20 1.00
The rate of return on the market stock index is 13 percent. The rate of return on a risk-freebank account is 1%. The B (beta) of stock XYZ is 1.5. Use the data to answer the questionsbelow.a. What is the market risk premium? Show your work.b. What is the cost of equity for XYZ? Show your work.c. What is the stock XYZ risk premium? Show your work.d. Draw the graph of the Security Market Line and show the stock of XYZ on the graph.The end-of-year dividend on stock ABC is expected to be $0.8. The growth rate of dividend isexpected to be 5 percent for ever. The current price of the ABC stock is $10. Use the data toanswer the questions below.e. What is the cost of equity for stock ABC? Show your work.f. Suppose stock KLM has the same end-of-year dividend, dividend growth rate andprice as stock ABC, but the risk of KLM stock is much greater than of the ABC stock.What is your estimate of the cost of equity of stock KLM using the method at part e?Do you agree with the valuation of the cost of…
Consider the following information and then calculate the required rate of return for the Global Equity Fund, which includes 4 stocks in the portfolio. The market's required rate of return is 11.25%, the risk-free rate is 4.65%, and the Fund's assets are as follows: Stock Investment Beta A $175,000 1.35 B $365,000 0.85 C $545,000 –0.45 D $1,145,000 2.08
Consider the following information and then calculate the required rate of return for the Scientific Investment Fund, which holds 4 stocks. The market's required rate of return is 16 %, the risk-free rate is 7 %, and the Fund's assets are as follows: Stock Investment Beta A $ 200,000 1.50 B 300,000 -0.50 C 500,000 1.25 D 1,000,000 1.1 Round it to two decimal places without the percent sign (%), e.g., 13.54.
You have just invested in a portfolio of three stocks. The amount of money that you invested in each stock and its beta are summarized below. Stock A B C Investment $196,000 294,000 490,000 Beta Expected rate of return 1.50 0.55 1.35 Calculate the beta of the portfolio and use the Capital Asset Pricing Model (CAPM) to compute the expected rate of return for the portfolio. Assume that the expected rate of return on the market is 18 percent and that the risk-free rate is 9 percent. (Round beta answer to 3 decimal places, e.g. 52.750 and expected rate of return answer to 2 decimal places, e.g. 52.75%) Beta of the portfolio %
CAPM As an equity analyst, you have developed the following return forecasts and risk estimates for two different stock mutual funds (Fund T and Fund U): Fund T Fund U Forecasted Return CAPM Beta 1.20 0.80 9.0% 10.0 a. If the risk-free rate is 3.9 percent and the expected market risk premium (E(RM)-RFR) is 6.1 percent, calculate the required return for each mutual fund according to the CAPM. b. Using the estimated required of returns from part (a) along with your return forecasts, demonstrate whether Fund T and Fund U are currently priced to fall directly on the security market line (SML), above the SML, or below the SML. c. According to your analysis, are Funds T and U overvalued, undervalued, or properly valued?
You have just invested in a portfolio of three stocks. The amount of money that you invested in each stock and its beta are summarized below. Stock Investment Beta A $218,000 1.50 B 327,000 0.60 C 545,000 1.18 Calculate the beta of the portfolio and use the Capital Asset Pricing Model (CAPM) to compute the expected rate of return for the portfolio. Assume that the expected rate of return on the market is 17 percent and that the risk-free rate is 8 percent. (Round beta answer to 3 decimal places, e.g. 52.750 and expected rate of return answer to 2 decimal places, e.g. 52.75%.) Beta of the portfolio Expected rate of return %
You have just invested in a portfolio of three stocks. The amount of money that you invested in each stock and its beta are summarized below. Stock. Investment A B C $224,000 336,000 560,000 Beta of the portfolio Beta Expected rate of return 1.50 0.60 Calculate the beta of the portfolio and use the Capital Asset Pricing Model (CAPM) to compute the expected rate of return for the portfolio. Assume that the expected rate of return on the market is 16 percent and that the risk-free rate is 8 percent. (Round beta answer to 3 decimal places, e.g. 52.750 and expected rate of return answer to 2 decimal places, e.g. 52.75%.) 1.35 do % SUPP

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