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    Ongoing performance of a company with a negative beta

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    There are few, if any, real companies with negative betas. But suppose you found one
    With beta = - .25.

    a. How would you expect this stock's rate of return to change if the overall market rose by an extra 5 percent? What if the market fell by an extra 5 percent?

    b. You have $1 million invested in a well-diversified portfolio of stocks. Now you receive an additional $20,000 bequest. Which of the following actions will yield the safest overall portfolio return?
    i. Invest $20,000 in Treasury bills (which have beta = 0).
    ii. Invest $20,000 in stocks with beta = 1.
    iii. Invest $20,000 in the stock with beta; = -.25.

    Explain your answer.

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    https://brainmass.com/business/finance/ongoing-performance-of-a-company-with-a-negative-beta-222534

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    There are few, if any real companies with negative betas. But suppose you found one with Beta=-0.25

    a) How would you expect this stock's rate of return to change if the overall market rose by an extra 5 percent? What if the market fell by an extra 5 percent?

    In ...

    Solution Summary

    Stock rate return and safest portfolio return for a company with a negative beta is found.

    $2.19

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