1) A portfolio is invested 10 percent in Stock G, 50 percent in Stock J, and 40 percent in Stock K. The expected returns on these stocks are 7 percent, 13 percent, and 15 percent, respectively. What is the portfolio's expected return? (Round your answer to 2 decimal places. (e.g., 32.16))
2) You own a stock portfolio invested 40 percent in Stock Q, 25 percent in Stock R, 25 percent in Stock S, and 10 percent in Stock T. The betas for these four stocks are 0.78, 1.16, 1.17, and 1.34, respectively. What is the portfolio beta? (Round your answer to 2 decimal places. (e.g., 32.16))
3) You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.23 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio? (Round your answer to 2 decimal places. (e.g., 32.16))
4) A stock has an expected return of 15.5 percent, its beta is 1.65, and the expected return on the market is 12.6 percent. What must the risk-free rate be? (Round your answer to 2 decimal places. (e.g., 32.16))
5) Sixx AM Manufacturing has a target debt?equity ratio of 0.55. Its cost of equity is 15 percent, and its cost of debt is 7 percent. If the tax rate is 35 percent, what is the company�s WACC? (Round your answer to 2 decimal places. (e.g., 32.16))
| 1) A portfolio is invested 10 percent in Stock G, 50 percent in Stock J, and 40 percent in Stock K. The expected returns on these stocks are 7 percent, 13 percent, and 15 percent, respectively. What is the portfolio's expected return? (Round your answer to 2 decimal places. (e.g., 32.16))
4) A stock has an expected return of 15.5 percent, its beta is 1.65, and the expected return on the market is 12.6 percent. What must the risk-free rate be? (Round your answer to 2 decimal places. (e.g., 32.16))
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Related questions
You own a portfolio that has $2,300 invested in Stock A and $3,400 invested in Stock B. Assume the expected returns on these stocks are 9 percent and 15 percent, respectively.
What is the expected return on the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Expected return on the portfolio
Stock J has a beta of 1.3 and an expected return of 13.66 percent, while Stock K has a beta of .85 and an expected return of 10.6 percent. You want a portfolio with the same risk as the market.
What is the portfolio weight of each stock? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)
| Stock J | ||||||||||||||||||||||
| Stock K | ||||||||||||||||||||||
| Information on Gerken Power Co., is shown below. Assume the companyâs tax rate is 35 percent.
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1. You own a stock portfolio invested 15 percent in Stock Q, 20 percent in Stock R, 35 percent in Stock S, and 30 percent in Stock T. The betas for these four stocks are 1.1, 0.8, 1.2, and 0.9, respectively. What is the portfolio beta? (Round your answer to 3 decimal places.)
| 2. You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.95, and the total portfolio is exactly as risky as the market, what must the beta be for the other stock in your portfolio? (Round your answer to 2 decimal places.) |
| Beta |
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| 3. A share of stock sells for $38 today. The beta of the stock is 1, and the expected return on the market is 17 percent. The stock is expected to pay a dividend of $1.10 in one year. If the risk-free rate is 3.7 percent, what should the share price be in one year? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) | ||
| Share price | $ |
| 4. A stock has a beta of 0.7 and an expected return of 9 percent. A risk-free asset currently earns 4 percent. |
| a. | What is the expected return on a portfolio that is equally invested in the two assets? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) |
| Expected return | % |
| b. | If a portfolio of the two assets has a beta of 0.6, what are the portfolio weights?(Round your answers to 2 decimal places. Omit the "%" sign in your response.) |
| Weight | |
| xS | % |
| xrf | % |
| c. | If a portfolio of the two assets has an expected return of 8 percent, what is its beta? (Round your answer to 2 decimal places.) |
| Beta |
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| d. | If a portfolio of the two assets has a beta of 2.80, what are the portfolio weights? (Negative amounts should be indicated by a minus sign. Omit the "%" sign in your response.) |
| Weight | |
| xS | % |
| xrf | % |
| 5. Asset W has an expected return of 8 percent and a beta of 2. If the risk-free rate is 5.5 percent, what is the market risk premium? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) |
| Market risk premium | % |
| 6. Stock Y has a beta of 1.5 and an expected return of 12 percent. Stock Z has a beta of 0.8 and an expected return of 8 percent. What would the risk-free rate have to be for the two stocks to be correctly priced relative to each other? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) |
| Risk-free rate | % |
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