Purchase Solution

BETA Calculation for a Stock Portfolio

Not what you're looking for?

Ask Custom Question

My portfolio is invested equally in five stocks (that is, each stock in the portfolio has a weight of 0.20) and has a required return of 9.4%. The risk-free rate is 5% and the market risk premium is 4%. What is the portfolio beta? Assume the my portfolio is on the SML.

Choose 1 of the following:
A. 0.950
B. 1.400
C. 0.800
D. 1.100
E. 1.550

The last stock was added to this portfolio is Lauren Clothing Co, which has a beta of 1.50. What was the portfolio's beta before Lauren's stock was added? (Hint: Remember that is was a four stock portfolio before the last stock was added.)

Choose 1 of the following:
A. 1.150
B. 1.000
C. 1.250
D. 1.175
E. 1.025

Please provide worksheet

Purchase this Solution
Solution Summary

The solution explains how to calculate the beta of a portfolio in 73 words with calculations clearly displayed.

Solution Preview

Problem: My portfolio is invested equally in five stocks (that is, each stock in the portfolio has a weight of 0.20) and has a required return of 9.4%. The risk-free rate is 5% and the market risk premium is 4%. What is the portfolio beta? ...

Purchase this Solution
Free BrainMass Quizzes
Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

View More Free Quizzes
Related BrainMass Solutions

  • Portfolio of Stocks

    261213 Portfolio of Stocks Demonstrate to your colleagues how you would calculate the expected rate of return, also called r-hat, and Beta on a self-designed portfolio of four common stocks selected from the NASDAQ or NYSE stock exchanges.

  • Calculating beta from raw data using regression

    It provides steps how we can make use of Excel software to run regression to caculate the beta for a stock.

  • Calculation of Beta of the portfolio

    What is the beta of the portfolio? b. You have decided to sell Creative Crafts for $4,000 and to use the proceeds to buy $4,000 of International Steel stock with a beta of 2.5.

  • Stock Variance

    Calculation of Stock Variance Given: Standard deviation of market index portfolio: (?m) = 20% or 0.2 Beta of stock A: (?) = 1.5 Residual standard deviation of stock A: (?

  • Portfolio Betas & expected returns

    303299 Portfolio Betas & expected returns 1. You own a stock portfolio invested 25% in stock Q, 20% in stock R, 15% in stock S, and 40% in stock T. The betas for these stocks are .84, 1.17, 1.11, and 1.36 respectively.

  • Expected returns and Alpha

    Hold this stock as a single-stock portfolio. a. Calculate expected return and alpha for each stock.

  • 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.

  • Stock valuation/standard deviation/beta

    security = 0.6 X 15%/18% = 0.5 The solution explains three questions relating to stock valuation, standard deviation and calculation of beta

  • Returns on portfolios/stock

    Return on Stock= Rf+B(Rm-Rf) Rf= risk free rate B=beta Rm= Expected return on market portfolio a. 6.4+1.2(13.8-6.4) =15.28% b. 3.5+1.2(13.8-3.5) =15.86% This explains the calculation of returns on portfolios/stock

View More Related Solutions