Financial management homework question, dealing with Portfolio Beta's...?
-
Suppose you held a diversified portfolio consisting of a $7500 investment in each of 20 different common stocks. The portfolio's beta is 1.12. Now suppose you decided to sell one of the stocks in your portfolio with a beta of 1.0 for $7500 and to use these proceeds to buy another stock with a beta of 1.75. What would your portfolio's new beta be? I know that the answer is 1.16 but have no idea how to go about working the problem to get the answer. Any help would be greatly appreciated.
-
Answer:
1.75-1=.75 (the difference in the two betas) .75/20=.0375 (which is the amount that this change will add to your original beta of 1.12) 1.12+.0375=1.1575 or 1.16 : )
magpie40... at Yahoo! Answers Visit the source
Related Q & A:
- Can you have too many ETF's in portfolio?Best solution by Yahoo! Answers
- What kind of jobs does a Bachelor's degree in Business Administration specialize in Management offers?Best solution by Yahoo! Answers
- Yahoo financial portfolio has changed format?Best solution by Yahoo! Answers
- What is the portfolio's beta?Best solution by wiki.answers.com
- What is the stock's beta?Best solution by wiki.answers.com
Just Added Q & A:
- How many active mobile subscribers are there in China?Best solution by Quora
- How to find the right vacation?Best solution by bookit.com
- How To Make Your Own Primer?Best solution by thekrazycouponlady.com
- How do you get the domain & range?Best solution by ChaCha
- How do you open pop up blockers?Best solution by Yahoo! Answers
For every problem there is a solution! Proved by Solucija.
-
Got an issue and looking for advice?
-
Ask Solucija to search every corner of the Web for help.
-
Get workable solutions and helpful tips in a moment.
Just ask Solucija about an issue you face and immediately get a list of ready solutions, answers and tips from other Internet users. We always provide the most suitable and complete answer to your question at the top, along with a few good alternatives below.