Westonci.ca is the premier destination for reliable answers to your questions, brought to you by a community of experts. Get immediate and reliable solutions to your questions from a knowledgeable community of professionals on our platform. Explore comprehensive solutions to your questions from a wide range of professionals on our user-friendly platform.
Sagot :
Answer:
hope this helps
Assume that you hold a well-diversified portfolio that has an expected return of 11.0% and a beta of 1.20. You are in the process of buying 1,000 shares of Alpha Corp at $10 a share and adding it to your portfolio. Alpha has an expected return of 21.5% and a beta of 1.70. The total value of your current portfolio is $90,000. What will the expected return and beta on the portfolio be after the purchase of the Alpha stock? Do not round your intermediate calculations.
Old portfolio return
11.0%
Old portfolio beta
1.20
New stock return
21.5%
New stock beta
1.70
% of portfolio in new stock = $ in New / ($ in old + $ in new) = $10,000/$100,000=
10%
New expected portfolio return = rp = 0.1 × 21.5% + 0.9 × 11% =
12.05%
New expected portfolio beta = bp = 0.1 × 1.70 + 0.9 × 1.20 =
1.25
Explanation:
Thank you for choosing our platform. We're dedicated to providing the best answers for all your questions. Visit us again. Thank you for visiting. Our goal is to provide the most accurate answers for all your informational needs. Come back soon. Your questions are important to us at Westonci.ca. Visit again for expert answers and reliable information.
