Your portfolio consists of the following investment in stock with corresponding beta:P100,000 in a 0.8 beta stockP150,000 in a 1.2 beta stockP50,000 in a 1.8beta stockLast year, the required rate of return of this portfolio is13%. The quoted risk-free rate on the short-term BSPissued treasurybill is 7%. This year the only change noted is the increased by 2% on the market risk premium. What is the current requiredrate of return of this portfolio?а.6.14%b.7.84%С.15.33%d.16.75% The portfolio managerof CBS Inc. is holdingthe following investments:Stock NameBetaAmount InvestedСВС1.410,000PCCI120,000CIBI0.840,000The financialmanager plans to sellof Stock PCCI on which the proceeds from the sale will be used to purchaseanother P15,000 of Stock CBC and another P5,000 of Stock CIBI. The risk-free rate is 5% and the marketreturn is 10.5%. How many percentage points higherwill the required return on the portfolio be after hecompletes thistransaction?a.0.05%b.0.13%C.0.39%d.0.62%

We have the portfolio with different values of stocks and different betas. We need to calculate the…

Your portfolio consists of the following investmentin stock with corresponding beta: P100,000 in a 0.8beta stock P150,000 in a 1.2 beta stock P50,000 in a 1.8beta stock Last year, the required rate of return of this portfolio is 13%. The quoted risk-free rate on the short-term BSPissued treasury bill is 7%. This year the only change noted is the increased by 2% on the marketrisk premium. What is the current required rate of return of this portfolio? 6.14% а. 7.84% 15.33% d. b. C. 16.75%

Your portfolio consists of the following investmentin stock with corresponding beta: P100,000 in a 0.8beta stock P150,000 in a 1.2 beta stock P50,000 in a 1.8beta stock Last year, the required rate of return of this portfolio is 13%. The quoted risk-free rate on the short-term BSPissued treasury bill is 7%. This year the only change noted is the increased by 2% on the marketrisk premium. What is the current required rate of return of this portfolio? 6.14% а. 7.84% 15.33% d. b. C. 16.75%

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 5FPE: Assume that you’ve just inherited $500,000 and have decided to invest a big chunk of it ($350,000,...

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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?
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…
Rafael 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% 0.900 23.00% Arthur Trust Inc. (AT) 20% 1.400 27.00% Li Corp. (LC) 15% 1.100 30.00% Transfer Fuels Co. (TF) 30% 0.300 34.00% Rafael calculated the portfolio’s beta as 0.850 and the portfolio’s required return as 8.6750%. Rafael 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 Rafael’s recommendation, assuming that the market is in equilibrium, how much will the portfolio’s required return change? (Note: Do not round…
Calculate the required rate of return for the Wagner Assets Management Group, which holds 4 stocks. The market's required rate of return is 17.0%, the risk-free rate is 7.0%, 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 0.75 Select the correct answer
Brandon is an analyst at a wealth management firm. One of his clients holds a $5,000 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 38.00% Arthur Trust Inc. (AT) 20% 1.500 42.00% Li Corp. (LC) 15% 1.100 45.00% Baque Co. (BC) 30% 0.300 49.00% Brandon calculated the portfolio’s beta as 0.818 and the portfolio’s required return as 8.4990%. 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 Baque 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: Do not round your…
Bulldogs Inc. has an investment fund amounting to P4,500,000. The portfolio consists of three stocks within the retail industry. P1,350,000 is invested in HLCM, 45% in MWIDE and the remaining in PHN. HLCM and PHN has a beta of 1.50 and 2, respectively. The average return on the market is 9.50% and it is 5% greater than the risk-free rate. The portfolio beta of investment held by Bulldogs Inc. is 2.What is the beta of stock MWIDE? a. 2.55 b. 2.33 c. 3.22 d. 3.55
The following common stocks are available for investment: COMMON STOCK (Ticker Symbol) BETA Nanyang Business Systems (NBS) 1.40 Yunnan Garden Supply, Inc. (YUWHO) 0.80 Bird Nest Soups Company (SLURP) 0.60 Wacho.com! (WACHO) 1.80 Park City Cola Company (BURP) 1.05 Oldies Records, Ltd. (SHABOOM) 0.90 A; If you invest 20 percent of your funds in each of the first three securities, and 15 percent in each of the last two, what is the beta of your portfolio? B; If the risk-free rate is 8 percent and the expected return on the market portfolio is 14 percent, what will be the portfolio’s expected return?
The composition of the Fingroup Fund portfolio is as follows: Stock Shares Price A 280,000 $ 35 B 380,000 40 C 480,000 15 D 680,000 20 If during the year the portfolio manager sells all of the holdings of stock D and replaces it with 170,000 shares of stock E at $50 per share and 170,000 shares of stock F at $30 per share, what is the portfolio turnover rate? (Round your answer to 2 decimal places.)
sofie Inc. has an investment fund amounting to P4,500,000. The portfolio consists of three stocks within the retail industry. P1,350,000 is invested in HLCM, 45% in MWIDE and the remaining in PHN. HLCM and PHN has a beta of 1.50 and 2, respectively. The average return on the market is 9.50% and it is 5% greater than the risk-free rate. The portfolio beta of investment held by Bulldogs Inc. is 2.What is the portfolio’s required rate of return?
The following common stocks are available for investment: COMMON STOCK (Ticker Symbol) BETA Nanyang Business Systems (NBS) 1.40 Yunnan Garden Supply, Inc. (YUWHO) 0.80 Bird Nest Soups Company (SLURP) 0.60 Wacho.com! (WACHO) 1.80 Park City Cola Company (BURP) 1.05 Oldies Records, Ltd. (SHABOOM) 0.90 If you invest 30 percent of your funds in each of the first two securities, and 10 percent in each of the last four, what is the beta of your portfolio? If the risk-free rate is 8 percent and the expected return on the market portfolio is 14 percent, what will be the portfolio’s expected return?
The financial controller is considering the use of the Capital Asset Pricing Model as a surrogate discount factor. The risk-free rate is 5 percent. The information in the table below has been used by company management in calculating the stock beta value which is 1.151and the expected return on the stock which is 12.5%.Year Stock Market Index share Price2011 2000 $15.002012 2400 $25.002013 2900 $33.002014 3500 $40.002015 4200 $45.002016 5000 $55.002017 5900 $62.002018 6000 $68.002019 6100 $74.002020 6200 $80.002021 6300 $83.33e) Calculate the CAPMf) Explain why this figure may differ from that calculated…
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