Homework SourseQ3 You are invested 2620 in growth stocks with a beta of 177
| Q3) You are invested 26.20% in growth stocks with a beta of 1.77, 26.70% in value stocks with a beta of 0.74, and 47.10% in the market portfolio. What is the beta of your portfolio? (1 point) |
| Q4) An analyst gathered the following information for a stock and market parameters: stock beta = 0.85; expected return on the Market = 9.50%; expected return on T-bills = 1.80%; current stock Price = $9.01; expected stock price in one year = $11.04; expected dividend payment next year = $1.13. Calculate the a) Required return for this stock (1 point): |
| b) Expected return for this stock (1 point): |
| Q5) The market risk premium for next period is 5.00% and the risk-free rate is 1.50%. Stock Z has a beta of 1.40 and an expected return of 10.00%. What is the: a) Market\'s reward-to-risk ratio? (1 point): |
| b) Stock Z\'s reward-to-risk ratio (1 point): |
| Q3) You are invested 26.20% in growth stocks with a beta of 1.77, 26.70% in value stocks with a beta of 0.74, and 47.10% in the market portfolio. What is the beta of your portfolio? (1 point) |
| Q4) An analyst gathered the following information for a stock and market parameters: stock beta = 0.85; expected return on the Market = 9.50%; expected return on T-bills = 1.80%; current stock Price = $9.01; expected stock price in one year = $11.04; expected dividend payment next year = $1.13. Calculate the a) Required return for this stock (1 point): |
| b) Expected return for this stock (1 point): |
| Q5) The market risk premium for next period is 5.00% and the risk-free rate is 1.50%. Stock Z has a beta of 1.40 and an expected return of 10.00%. What is the: a) Market\'s reward-to-risk ratio? (1 point): |
| b) Stock Z\'s reward-to-risk ratio (1 point): |
Solution
(3) Growth Stock Proportion = 26.2 %, Beta = 1.77
Value Stock Proportion = 26.7%, Beta = 0.74
Market Portfolio Proportion = 47.1 %, Beta =1
Weighted Average Portfolio Beta = 0.262 x 1.77 + 0.267 x 0.74 + 0.471 x 1 = 1.13232 or 1.13 approximately.
NOTE: Please raise separate queries for solutions to the remaining unrelated questions.
