A portfolio manager is holding the following investments: Stock Amount Invested Beta X RM10 million 1.4 Y 20 million 1.0 40 million 0.8 The manager plans to sell his holdings of Stock Y. The money from the sale will be used to purchase another RM15 million of Stock X and another RM5 million of Stock Z. The risk-free rate is 5 percent and the market risk premium is 5.5 percent. How many percentage points higher will the required return on the portfolio be after he completes this transaction?
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- A portfolio manager is holding the following investments: Stock Amount Invested Beta RM10 million 1.4 Y 20 million 1.0 40 million 0.8 The manager plans to sell his holdings of Stock Y. The money from the sale will be used to purchase another RM15 million of Stock X and another RM5 million of Stock Z. The risk-free rate is 5 percent and the market risk premium is 5.5 percent. How many percentage points higher will the required return on the portfolio be after he completes this transaction?A portfolio manager is holding the following investments: Stock Amount Invested Beta 10 million 1.4 Y 20 million 1.0 Z 40 million 0.8 The manager plans to sell his holdings of Stock Y. The money from the sale will be used to purchase another $15 million of Stock X and another $5 million of Stock Z. The risk-free rate is 5 percent and the market risk premium is 5.5 percent. How many percentage points higher will the required return on the portfolio be after he completes this transaction?An investor is forming a portfolio by investing P25,000 in stock A that has a beta of 1.50, and P25,000 in stock B that has a beta of 0.80. The return on the market is equal to 6 percent and Treasury bonds have a yield of 4 percent. What is the required rate of return on the investor's portfolio? a. 6.3% b. 6.8% С. 7.8% d. 8.0%
- Suppose you form a portfolio consisting of $31,000 invested in a mutual fund with beta of 1.6, $18,000 invested in Treasury securities $19,000 invested in an index fund with the same beta as the entire market. Expected market risk premium is 6.3%. Risk-free rate is 0.8% What is the exped return of this portfolio according to the CAPM? O a. 6.9% Ob. 6.6% O c. 7.2% d. 9.1% e. 5.8%Jack has $100,000 invested in a 2-stock portfolio. $35,000 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 1.50 and Y's beta is 0.70. What is the portfolio's beta? show work in in excel to better understand How is Beta measured and what does it tell us about the risk of the asset?You have just invested in a portfolio of three stocks. The amount of money that you invested in each stock and its beta are summarized below. Stock Investment Beta A $222,000 1.41 B 333,000 0.53 C 555,000 1.30 Calculate the beta of the portfolio and use the Capital Asset Pricing Model (CAPM) to compute the expected rate of return for the portfolio. Assume that the expected rate of return on the market is 12 percent and that the risk-free rate is 7 percent. (Round beta answer to 3 decimal places, e.g. 52.750 and expected rate of return answer to 2 decimal places, e.g. 52.75%.) Beta of the portfolio enter the beta rounded to 3 decimal places Expected rate of return enter percentages rounded to 2 decimal places %
- (a)As an investor, you are holding the following investments: Stock Amount invested beta A $40 million 1.4 B $30 million 1.0 C $60 million 0.8 You are planning to sell the holdings of Stock B. The money from the sale will be used topurchase another $20 million of Stock A and another $10 million of Stock C. The risk-free rateis 7 percent and the market risk premium is 6.5 percent. How many percentage points higherwill the required return on the portfolio be after you complete this transaction?1. A fund manager is holding the following stocks: Stock Amount Invested Beta 1 $300 million 1.2 2 560 million 1.4 3 320 million 0.7 4 230 million 1.8 The risk-free rate is 5 percent and the market risk premium is also 5 percent. If the manager sells half of her investment in Stock 2 ($280 million) and puts the money in Stock 4, by how many percentage points will her portfolio’s required return increase? Group of answer choices 2.00% 0.4% 0.2% 0.22% 2. AlphaGet is currently assessing the value of its securities and have obtained the following information that should provide AlphaGet with the necessary information to estimate the value of its securities: Current long-term government securities carry a yield of 6.5% which includes an inflation premium of 1.25% Based on the credit rating of AlphaGet of BAA, the estimated credit spread of AlphaGet is at 2.5% Utilizing the work of an external expert, beta of AlphaGet is estimated at…The portfolio managerof CBS Inc. is holdingthe following investments: Stock Name Beta Amount Invested СВС 1.4 10,000 PCCI 1 20,000 CIBI 0.8 40,000 The financialmanager plans to sellof Stock PCCI on which the proceeds from the sale will be used to purchase another P15,000 of Stock CBC and another P5,000 of Stock CIBI. The risk-free rate is 5% and the market return is 10.5%. How many percentage points higherwill the required return on the portfolio be after he completes thistransaction? a. 0.05% b. 0.13% C. 0.39% d. 0.62%
- An investor is forming a portfolio by investing $8,000 in stock A which has a beta of 0.80, and $8,000 in stock B which has a beta of 2.20. The return on the market is equal to 8% and treasure bonds have a yield of 3% (rRF). What’s the portfolio beta? 0.80 1.50 1.90 2.20The rate of return on the market stock index is 13 percent. The rate of return on a risk-freebank account is 1%. The B (beta) of stock XYZ is 1.5. Use the data to answer the questionsbelow.a. What is the market risk premium? Show your work.b. What is the cost of equity for XYZ? Show your work.c. What is the stock XYZ risk premium? Show your work.d. Draw the graph of the Security Market Line and show the stock of XYZ on the graph.The end-of-year dividend on stock ABC is expected to be $0.8. The growth rate of dividend isexpected to be 5 percent for ever. The current price of the ABC stock is $10. Use the data toanswer the questions below.e. What is the cost of equity for stock ABC? Show your work.f. Suppose stock KLM has the same end-of-year dividend, dividend growth rate andprice as stock ABC, but the risk of KLM stock is much greater than of the ABC stock.What is your estimate of the cost of equity of stock KLM using the method at part e?Do you agree with the valuation of the cost of…You have just invested in a portfolio of three stocks. The amount of money that you invested in each stock and its beta are summarized below. Stock. Investment A B C $224,000 336,000 560,000 Beta of the portfolio Beta Expected rate of return 1.50 0.60 Calculate the beta of the portfolio and use the Capital Asset Pricing Model (CAPM) to compute the expected rate of return for the portfolio. Assume that the expected rate of return on the market is 16 percent and that the risk-free rate is 8 percent. (Round beta answer to 3 decimal places, e.g. 52.750 and expected rate of return answer to 2 decimal places, e.g. 52.75%.) 1.35 do % SUPP