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Portfolio beta and CAPM: You are putting together a portfolio made up of four different stocks

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Portfolio beta and CAPM: You are putting together a portfolio made up of four different stocks. You;are considering two possible weightings.;a. What is the beta on each portfolio?;b. Which portfolio is risker;c. If the risk free rate of interest were 5 percent and the market risk premium were 7.5 percent, what;rate of return would you expect to earn from each of the portfolios?;Portfolio Weightings;Asset Beta First Portfolio Second Portfolio;A 2.2 15% 35%;B 1.1 15% 35%;C 0.45 35% 15%;D -1.7 35% 15%;a. The beta on the first portfolio is _____.(Round to three decimal places.);The beta on the second portfolio is _____. (Round to three decimal places.);b. Which portfolio is risker? (Select the best choice below);a. the second portfolio because the beta is smaller.;b. the first portfolio because the beat is larger.;c. the first portfolio because the beta is smaller.;d. the second portfolio because the beta is larger.;c. If the risk free rate of interest were 5 percent and the market risk premium were 7.5 percent, what;were 7.5 %, then the rate of return on the first portfolio is expected to be ______%.;If the risk free rate of interest were 5% and the market risk premium were 7.5%, then the rate of return on;on the the second portfolio is expected to be _____%.(Round to two decimal places);Additional Requirements;Min Pages: 1;Level of Detail: Show all work

 

Paper#30356 | Written in 18-Jul-2015

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