Collette has four different stocks in her portfolio. She owns 79 shares of Stock A with a market price of $41.00, 137 shares of Stock B which is currently at $66.00 per share, 163 shares of Stock C which is listed at $87.00 per share, and 259 shares of Stock D, with a price of $75.00 per share. If the betas and returns for the four stocks are as follows, what is Collette âs portfolio beta and portfolio return?
Beta Return
Stock A 1.1 5%
Stock B .95 3%
Stock C 1.75 10%
Stock D 1.36 8%
Collette has four different stocks in her portfolio. She owns 79 shares of Stock A with a market price of $41.00, 137 shares of Stock B which is currently at $66.00 per share, 163 shares of Stock C which is listed at $87.00 per share, and 259 shares of Stock D, with a price of $75.00 per share. If the betas and returns for the four stocks are as follows, what is Collette âs portfolio beta and portfolio return?
Beta Return
Stock A 1.1 5%
Stock B .95 3%
Stock C 1.75 10%
Stock D 1.36 8%
Related questions
1. You own a stock portfolio invested 15 percent in Stock Q, 20 percent in Stock R, 35 percent in Stock S, and 30 percent in Stock T. The betas for these four stocks are 1.1, 0.8, 1.2, and 0.9, respectively. What is the portfolio beta? (Round your answer to 3 decimal places.)
| 2. You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.95, and the total portfolio is exactly as risky as the market, what must the beta be for the other stock in your portfolio? (Round your answer to 2 decimal places.) |
| Beta |
| |
| 3. A share of stock sells for $38 today. The beta of the stock is 1, and the expected return on the market is 17 percent. The stock is expected to pay a dividend of $1.10 in one year. If the risk-free rate is 3.7 percent, what should the share price be in one year? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) | ||
| Share price | $ |
| 4. A stock has a beta of 0.7 and an expected return of 9 percent. A risk-free asset currently earns 4 percent. |
| a. | What is the expected return on a portfolio that is equally invested in the two assets? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) |
| Expected return | % |
| b. | If a portfolio of the two assets has a beta of 0.6, what are the portfolio weights?(Round your answers to 2 decimal places. Omit the "%" sign in your response.) |
| Weight | |
| xS | % |
| xrf | % |
| c. | If a portfolio of the two assets has an expected return of 8 percent, what is its beta? (Round your answer to 2 decimal places.) |
| Beta |
|
| d. | If a portfolio of the two assets has a beta of 2.80, what are the portfolio weights? (Negative amounts should be indicated by a minus sign. Omit the "%" sign in your response.) |
| Weight | |
| xS | % |
| xrf | % |
| 5. Asset W has an expected return of 8 percent and a beta of 2. If the risk-free rate is 5.5 percent, what is the market risk premium? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) |
| Market risk premium | % |
| 6. Stock Y has a beta of 1.5 and an expected return of 12 percent. Stock Z has a beta of 0.8 and an expected return of 8 percent. What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) |
| Risk-free rate | % |
PLEASE SHOWING WORKING!!!
1.
| If the economy booms, RTF, Inc. stock is expected to return 13 percent. If the economy goes into a recessionary period, then RTF is expected to only return 3 percent. The probability of a boom is 81 percent while the probability of a recession is 19 percent. What is the variance of the returns on RTF, Inc. stock? |
a. .001539
b. .001247
c. .000954
d. .055500
e. .039230
2. You own the following portfolio of stocks. What is the portfolio weight of stock C?
| Stock | Number of Shares | Price per Share |
| A | 120 | $40 |
| B | 600 | $36 |
| C | 400 | $60 |
| D | 280 | $59 |
a. 35.86 percent
b. 24.69 percent
c. 64.14 percent
d. 32.28 percent
e. 56.97 percent
3
| The risk-free rate of return is 4.6 percent and the market risk premium is 14 percent. What is the expected rate of return on a stock with a beta of 1.7? |
a. 14.20 percent
b. 21.82 percent
c. 23.80 percent
d. 28.40 percent
e. 10.91 percent
