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Business, 26.06.2020 16:01 amandasantiago2001

a. Movie Part’s bonds have 9 years remaining to maturity. The bonds have a face value of $1,000 and a yield to maturity of 8%. They pay interest annually and have a 9% coupon rate. What is their current yield? b. Assume that the risk-free rate is 5% and that the market risk premium is 6%. What is the required return on the market, on a stock with a beta of 1.0, and on a stock with a beta of 1.2? c. Assume that the risk-free rate is 6% and that the expected return on the market is 13%. What is the required rate of return on a stock that has a beta of 0.7? d. One of your friend has $35,000 invested in a stock with a beta of 0.8 and another $40,000 invested in a stock with a beta of 1.4. If these are the only two investments in her portfolio, what is her portfolio’s beta? e. Imagine that you have portfolio of a $7,500 investment in each of 20 different common stocks. The portfolio’s beta is 1.09. Now, suppose you sell one of the stocks with a beta of 1.0 for $8,500 and use the proceeds to buy another stock whose beta is 1.05. Calculate your portfolio’s new beta.

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a. Movie Part’s bonds have 9 years remaining to maturity. The bonds have a face value of $1,000 and...
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