01..Donald Gilmore has $100,000 invested in a 2-stock portfolio. $80,000 is invested in Stock X...
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01..Donald Gilmore has $100,000 invested in a 2-stock portfolio. $80,000 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 1.50 and Y's beta is 0.70. What is the portfolio's beta?
02..Porter Plumbing's stock had a required return of 12.75% last year, when the risk-free rate was 5.50% and the market risk premium was 4.75%. Then an increase in investor risk aversion caused the market risk premium to rise by 2%. The risk-free rate and the firm's beta remain unchanged. What is the company's new required rate of return? (Hint: First calculate the beta, then find the required return.)
03..Stock A's stock has a beta of 1.30, and its required return is 15.50%. Stock B's beta is 0.80. If the risk-free rate is 4.75%, what is the required rate of return on B's stock? (Hint: First find the market risk premium.)
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