Gb550 unit 4 quiz

Aug 11th, 2016
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1. You hold a diversified portfolio consisting of a $5,000 investment in each of 20 different common stocks. The portfolio beta is equal to 1.12. You have decided to sell a lead mining stock (b = 1.00) at $5,000 net and use the proceeds to buy a like amount of a steel company stock (b = 2.00). What is the new beta of the portfolio? (Points : 2) 1.1139 1.1700 1.2311 1.2927 Question 2. 2. Calculate the required rate of return for Mercury, Inc., assuming that (1) investors expect a 4.0% rate of inflation in the future, (2) the real risk-free rate is 3.0%, (3) the market risk premium is 5.0%, (4) Mercury has a beta of 1.00, and (5) its realized rate of return has averaged 15.0% over the last 5 years. (Points : 2) 10.29% 10.83% 11.40% 12.00% Question 3. 3. In a portfolio of three different stocks, which of the following could NOT be true? (Points : 2) The riskiness of the portfolio is less than the riskiness of each of the stocks if they were held in isolation. The riskines

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Gb550 unit 4 quiz1. You hold a diversified portfolio consisting of a $5,000 investment in each of 20 differentcommon stocks. The portfolio beta is equal to 1.12. You have decided to sell a lead miningstock (b = 1.00) at $5,000 net and use the proceeds to buy a like amount of a steel companystock (b = 2.00). What is the new beta of the portfolio?(Points : 2)1.11391.17001.23111.2927Question 2. 2. Calculate the required rate of return for Mercury, Inc., assuming that (1)investors expect a 4.0% rate of inflation in the future, (2) the real risk-free rate is 3.0%, (3)the market risk premium is 5.0%, (4) Mercury has a beta of 1.00, and (5) its realized rate ofreturn has averaged 15.0% over the last 5 years.(Points : 2)10.29%10.83%11.40%12.00%Question 3. 3. In a portfolio of three different stocks, which of the following could NOT betrue? (Points : 2)The riskiness of the portfolio is less than the riskiness of each of the stocks if they were heldin isolation.The riskiness of the portfolio is greater than the riskiness of one or two of the stocks.The beta of the portfolio is less than the betas of each of the individual stocks.The beta of the portfolio is greater t

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