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Stock Price/ Portfolio beta / Investment

1.- Malenke's Incorporated paid a dividend (Do) of $2.00 this morning. Malenke's stockholders require a 20 percent of return. Calculate Malenke's stock price under the following scenarios: Malenke's earnings and dividends remain constant forever. Malenke's earnings and dividends grow at a rate of 10 percent forever. Malenke's earnings and dividends grow at a rate of -10 percent forever.

2.- Your hold four stocks in your portfolio, Stock A, Stock B, Stock C, and Stock D. The portfolio B is 1.2. Stock C constitutes 40 percent of the dollar value of your holdings and has a B of 1.60. If you sell all of your holdings in stock C, and replace them with an equal investment in stock E (which has a B of 1.25), what will your new portfolio B be?

3.- San Marco Incorporated has B of 1.75. MacMullan Corporation has a B of 2.75. the risk-free rate is 4 percent and the market risk premium is 8 percent. If I want to invest in both San Marco and MacMullan, and I want my investment to have a required rate of return of 20 percent, what proportions of my investment should be in each firm?

I need help with this problems. I have tried myself to do it but I just can't get it. Please show me step by step so I can understand it.

Solution Summary

The solution explains three questions relating to stock price, beta of a portfolio and proportion of investment to be made in different assets