80.2K

Verified Solution

Link Copied!

Question 4 (6-11) Portfolio Beta 2009 -20.00 (Ans = 1.125 is new portfolio beta) A Dev Year A A dev Sq 2010 2011 2012 42.00 20.00 -8.00 b. Calculate the standard deviations for the market and Stock J. 2013 25.00 You have a $2 million portfolio consisting of a $100,000 investment in each of 20 different stocks. The portfolio has a beta of 1.1. You are considering selling $100,000 worth of one stock with a beta of 0.9 and using the proceeds to purchase another stock with a beta of 1.4. What will the portfolio's new beta be after these transactions? Year B B dev B Dev Sq Year Port. 2009 -5.00 2010 15.00 2011 -13.00 50.00 12.00 2012 2013 a. calculate the average rate of return for each stock during 5 year period (ans 11.8 for A and B) 2009-12.50 2010 28.50 2011 3.50 2012 21.00 2013 18.50 Port. Dev Port Dev Sq b. Portfolio with 50% stock A and 50% of stock B. What will be the realized rate of return on portfolio in each year. What will be the average return on the portfolio during this (ans-11.3) c. SD of returns of each stock and for portfolio period? (ans 25.3, 24.3, 16.3)

b. Calculate the standard deviations for the market and Stock J. Question 4 (6-11) Portiolio Beta You have a $2 million portfolio consisting of a $100,000 investment in each of 20 different stocks. The portfolio has a beta of 1.1. You are considering selling $100,000 worth of one stock with a beta of 0.9 and using the proceeds to purchase another stock with a beta of 1.4. What will the portfolio's new beta be after these transactions? (Ans =1.125 is new nortfolio beta) (aris = 11.8 for A and B) b. Portfolio with 50% stock A and 50% of stock B. What will be the realized rate of return on portfolio in each year. What will be the average return on the portfolio during this fans =11.3 )

Answer & Explanation Solved by verified expert

See Answer