24 9 QuizzesFIN32088r C secure l httpssrudesire2learncomd23

#24

(9 Quizzes-FIN-320.88-r- C | secure l https://sru.desire2learn.com/d23/1ms/quizzing/user/attempt/quiz.start.f FIN-320-88- Managerial Finance (Winter 17) Course Home Content Dropbox Discussions Grades Quizzes Class FIN 320 Final - Winter 2017 Est. Length: 2:00:00 Ryan Maraffi: Attempt 1 Save Question 24 (1 point) Martin Ortner holds a $200.000 portfolio consisting of the following stocks: Stock Investment S 50,000 50,000 50,000 Beta 0.95 0.80 1.00 1.20 Total What is the portfolio\'s beta? 0.938 0.988 1.037 1.089 Save Question 25 (1 point) How much should you pay for a $1,000 bond with 10% coupon, annual paymen years to maturity if the interest rate is 12%? $927.90 $981.40

Solution

Investment in each stock = $50,000
Total Investment = $200,000

Weight of each stock in portfolio = $50,000 / $200,000
Weight of each stock in portfolio = 0.25

Portfolio Beta = Sum of (Stock Beta * Weight of Beta)
Portfolio Beta = 0.95 * 0.25 + 0.80 * 0.25 + 1.00 * 0.25 + 1.20 * 0.25
Portfolio Beta = 0.988

So, Portfolio beta is 0.988