35. You are evaluating a portfolio of four Invested in each stock and the equity

Question

35. You are evaluating a portfolio of four Invested in each stock and the equity betas stocks. The following table shows the dollar amount Stock Investment Beta $170,000 1.24 2$220,000 -0.61 3$460,000 0.91 $330,000 05s What is the portfolio beta? Your answer 36. You have just purchased a 10-year, $1,000 par value bond, which was issued two years ago, for $900. The annual coupon rate on this bond is 5 percent, with interest paid each six-months. Assume that after t $760. What will be your yield (% return) on the bond over the three year period? 50+ (1000 -40 Your answer 0x 900+l000 Page 10 of 20

Explanation / Answer

Ans. Calculation of Portfolio beta

Stock value Beta Weight Portfolio Beta (betaXweight)

1 $170000 1.24 .144 .179

2 $220000 -.61 .186 -.113

3 $460000 .91 .390 .355

4. $330000 .58 .280 .162

Total value $1180000 1 .583

Portfolio beta is = .583

36. Calculation Yield of bond

Purchasing price is $900

Coupon rate is 5% ,

Period of holding is 3yrs

Redemption value of bond is $760

Calculation yield = 50+ (760-900)/3

900+760/2

= 50-46.67/830 X100 = .40%

Related Questions

Navigate

• Browse (All)
• Browse 3
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.