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Beta Calculations

Michael Margolis is a single parent and motivational training consultant from Palatine, Illinois. He is wondering about potential returns on investments given certain amounts of risk. Michael invested a total of $12,000 in three stocks ($4,000 in each) with different betas: stock A with a beta of 0.7, stock B with a beta of 1.8, and stock C with a beta of 2.5. If the stock market rises 8 percent over the next year, what will be the likely value of each investment? Do not round your intermediate calculations. Round your answers to the nearest dollar.

Stock A Stock B Stock C Likely value

A: B: C:

If the stock market declines 9 percent over the next year, what will be the likely value of each of Michael’s investments? Do not round your intermediate calculations. Round your answers to the nearest dollar.

Stock A Stock B Stock C Likely value

A: B: C:

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92861368

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