You are the money manager of a 5 stock portfolio with the following investment a

Question

You are the money manager of a 5 stock portfolio with the following investment amounts in each one: $10 million, $2 million, $5 million, $6 million and $500,000. The betas of the 5 stocks are 1.25, -1.75, 1.00, 0.75 and 1.9, respectively. The market's required return is 14% and the risk free return is 4.8%. How (and why) does this portfolio compare to an average risk portfolio assuming that the market return is a reasonable proxy for an average risk portfolio?

A firm borrows $5000 and the loan is to be repaid in 4 equal payments at the end of each of the next 4 years so that the ending balance at the end of year 4 is 0. The interest rate on the loan is 10 percent. The principal repayment in year 3 is:

You are the money manager of a 5 stock portfolio with the following investment amounts in each one: $10 million, $2 million, $5 million, $6 million and $500,000. The betas of the 5 stocks are 1.25, -1.75, 1.00, 0.75 and 1.9, respectively. The market's required return is 14% and the risk free return is 4.8%. How (and why) does this portfolio compare to an average risk portfolio assuming that the market return is a reasonable proxy for an average risk portfolio?

A firm borrows $5000 and the loan is to be repaid in 4 equal payments at the end of each of the next 4 years so that the ending balance at the end of year 4 is 0. The interest rate on the loan is 10 percent. The principal repayment in year 3 is:

Explanation / Answer

2) Beginning Balance Interest Principal Ending Balance 1 $5,000.00 $451.84 $1,069.88 $3,930.09 2 $3,930.09 $339.82 $1,181.90 $2,748.14 3 $2,748.14 $216.05 $1,305.67 $1,442.43 4 $1,442.43 $79.33 $1,442.39 $0.00

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