You Own a $222,000,000 Portfolio That Is Invested in Stocks

question 6

Multiple Choice

You own a $222,000,000 portfolio that is invested in Stocks A and B.The portfolio beta is equal to the market beta.Stock A has an expected return of 18.7 percent and has a beta of 1.42.Stock B has a beta of 0.88.What is the value of your investment in Stock A?

• A)$38,600
• B)$42,333
• C)$44,500
• D)$49,333
• E)$47,200

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Definitions:

Trial Balance

A report that lists the balances of all ledger accounts at a specific point in time, used to verify the equality of debits and credits.

Debit Column

The left-hand column in an account or financial statement where debits are recorded, typically representing increases in assets or expenses and decreases in liabilities or equity.

Credit Column

Part of an accounting record where increases in liabilities, revenues, and equity accounts are recorded.

Accounting Record

A documented transaction or financial event that is used in the process of accounting.