Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
15th Edition
ISBN: 9780134476315
Author: Chad J. Zutter, Scott B. Smart
Publisher: PEARSON
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Chapter 8, Problem 8.5WUE
Summary Introduction
To discuss:
Beta of portfolio.
Introduction:
Beta is an indicator of the risk tha measures the systematic risk of a risky investment by comparing the risky investment with the average risky asset in the market.
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Students have asked these similar questions
You decide to form a portfolio of the following amounts invested in the
following stocks. What is the beta of the portfolio?
SET YOUR CALCULATOR TO 4 DECIMAL PLACES THEN INPUT THE
ANSWER ROUNDING TO 2 DECIMALS i.e. if your answer is 1.2455, enter it as
1.25.
Amount Beta
$5,817 1.65
Microsoft $4,128 0.54
$2,818 1.67
$8,782 2.27
Stock
Apple
Ford
Time
Warner
Expected Return
10.50%
16.90%
15.75%
11.80%
If you hold a portfolio made up of the following stocks:
Investment Value
Beta
Stock X
$4,000
1.5
Stock Y
$5,000
1.0
Stock Z
$1,000
.5
What is the beta of the portfolio?
A.
1.00
B.
1.24
C.
1.33
D.
1.15
Qn4: Assume a two-stock portfolio created with $50,000 is invested
in both HT and Collections. The expected returns are given below:
Calculate the portfolio's return for each state of economy and fill them in the last
column, under "Portfolio" (Hint: The portfolio's expected return is a weighted
average of the returns of the portfolio's component assets).
Calculate the portfolio's expected return (Hint: You have to incorporate the
probability distribution of each state of economy).
Calculate the portfolio's standard deviation.
Economy
Recession
Below average
Average
Above average
Boom
Prob. HT
0.1 -27.0%
0.2
-7.0%
0.4
15.0%
0.2
30.0%
0.1
45.0%
Coll
27.0%
13.0%
0.0%
-11.0%
-21.0%
Portfolio
Chapter 8 Solutions
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Ch. 8.1 - What is risk in the context of financial decision...Ch. 8.1 - Prob. 8.2RQCh. 8.1 - Compare the following risk preferences: (a) risk...Ch. 8.2 - Explain how the range is used in scenario...Ch. 8.2 - Prob. 8.5RQCh. 8.2 - Prob. 8.6RQCh. 8.2 - What does the coefficient of variation reveal...Ch. 8.3 - What is an efficient portfolio? How can the return...Ch. 8.3 - Prob. 8.9RQCh. 8.3 - How does international diversification enhance...
Ch. 8.4 - Prob. 8.11RQCh. 8.4 - Prob. 8.12RQCh. 8.4 - Prob. 8.13RQCh. 8.4 - What impact would the following changes have on...Ch. 8 - Prob. 1ORCh. 8 - Prob. 8.1STPCh. 8 - Prob. 8.2STPCh. 8 - Prob. 8.1WUECh. 8 - Prob. 8.2WUECh. 8 - Prob. 8.3WUECh. 8 - Prob. 8.4WUECh. 8 - Prob. 8.5WUECh. 8 - Prob. 8.6WUECh. 8 - Prob. 8.1PCh. 8 - Prob. 8.2PCh. 8 - Prob. 8.3PCh. 8 - Prob. 8.4PCh. 8 - Prob. 8.5PCh. 8 - Learning Goal 2 P8-6 Bar charts and risk Swans...Ch. 8 - Prob. 8.7PCh. 8 - Prob. 8.8PCh. 8 - Prob. 8.9PCh. 8 - Prob. 8.10PCh. 8 - Prob. 8.11PCh. 8 - Prob. 8.12PCh. 8 - Prob. 8.13PCh. 8 - Prob. 8.14PCh. 8 - Learning Goal 4 P8- 15 Correlation, risk, and...Ch. 8 - Prob. 8.16PCh. 8 - Learning Goal 5 P8- 17 Total, nondiversifiable,...Ch. 8 - Prob. 8.18PCh. 8 - Prob. 8.19PCh. 8 - Prob. 8.20PCh. 8 - Prob. 8.21PCh. 8 - Prob. 8.22PCh. 8 - Prob. 8.23PCh. 8 - Prob. 8.24PCh. 8 - Prob. 8.25PCh. 8 - Prob. 8.26PCh. 8 - Prob. 8.27PCh. 8 - Learning Goal 6 P8- 28 Security market line (SML)...Ch. 8 - Prob. 8.29PCh. 8 - Prob. 8.30PCh. 8 - Prob. 8.31PCh. 8 - Spreadsheet Exercise Jane is considering investing...
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