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Risk & Return
Calculate the portfolio's beta
For a portfolio
beta p=summation of wi* beta i= w1* beta 1 + w2*beta 2+ w3beta 3 + w4beta 4+---
Security Weight (wi) Explanation Beta beta i wi beta i Explanation
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Portofolio's new beta
84539 Calculate your portofolio's new beta Suppose you hold a diversified portfolio consisting of a $7,500 investment in each of 20 different common stocks. The portfolio beta is equal to 1.12.
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A money manager is managing the account of a large investor; calculate Stock D's estimated beta.
First we calculate the portfolio Beta using SML:
ER = Rf+(Rm-Rf)*Beta
i.e. 17 = 7 + (14-7)*Beta or 10 = 7*B
Then Beta = 10/7=1.4286
While the portfolio Beta is also the weighted average of the Betas of the stocks in the portfolio
I.e.
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Finance Questions and Problems
Now, suppose you sell one of the stocks with a beta of 1.0 for $7,500 and use the proceeds to buy another stock whose beta is 1.75. Calculate the new beta of the portfolio.
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Stock Portfolio expected return and beta
243528 Stock Portfolio expected return and beta *see attached for table*
You own a portfolio consisting of the following stocks:
Multiple Choice - calculate expected portfolio return and portfolio beta:
A.
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Determining Risk of Stocks
She wants to invest $40,000 in a stock with a beta of 2.0. After adding the new stock to her existing portfolio, what will the portfolio beta be?
Stock Weight Beta
Old stock 0.8 1
New Stock 0.2 2
Portfolio beta 1.20
5.
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Accounting: Capital Market Calculations
Assume that the risk-free interest rate is 3%, the expected return on the market is 8%, the beta of stock i is 1.50, and the beta of stock j is 1.8. Are i and j overpriced, underpriced or fairly priced?
6. Calculate the beta of portfolio, P.
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Calculating expected return, standard deviation and CV
(d) If you were to create a portfolio consisting of 67% of Stock X and 33% of Stock Y, what will be the expected return (rP) and the standard deviation for your portfolio?
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Expected return and beta for Tundra Corporation
The solution explains how to calculate the expected return and beta of a portfolio after addition of a new stock
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Calculating cost of equity and expected rate of return
If I have 2 companies, A and B, the beta of A is .50, the beta of B is .23, if I invest 1/3 of my money in each of the stocks of these companies, What will the beta of the portfolio be?