FIN 300 Ch. 13 Homework (Final)

17.64%

Boom 0.68 0.13 0.22 0.40 Bust 0.32 0.10 0.04 − 0.08 Expected Return

.019584

Boom 0.68 0.13 0.22 0.40 Bust 0.32 0.10 0.04 − 0.08 Variance

13.64%

Recession 0.23 − 0.17 Normal 0.48 0.13 Boom 0.29 0.39

1.74

You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.26 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio?

12.44%

You own a portfolio that is 28 percent invested in Stock X, 25 percent in Stock Y, and 47 percent in Stock Z. The expected returns on these three stocks are 10 percent, 16 percent, and 12 percent, respectively. What is the expected return on the portfolio?

1.05

You own a stock portfolio invested 30 percent in Stock Q, 25 percent in Stock R, 35 percent in Stock S, and 10 percent in Stock T. The betas for these four stocks are 0.76, 1.14, 1.15, and 1.32, respectively. What is the portfolio beta?