Posted by **Yinka** on Thursday, November 15, 2012 at 10:18am.

A portfolio manager is managing a $10 million portfolio. Currently the portfolio is invested in the following manner: Investment Dollar Amount Invested Beta Electric Utility $2 million 0.6 Cable Company $3 million 0.8 Real Estate Development $3 million 1.2 International Projects $2 million 1.4 Required: a) What is the portfolio’s beta? b) If the risk free-rate is 5% and the market risk premium is 5.5 %, what is the portfolio’s required rate of return? c) If the expected return on the portfolio for the upcoming year is 9.5% with a standard deviation of 4.5%, what is the probability that the portfolio will have a return greater than its required return? What is the probability the portfolio would have a negative return? The portfolio manager is considering a change in the strategic focus of the portfolio; it will reduce its reliance on the electric utility investment, reducing the investment to $1 million and at the same time increasing the investment in international projects to $3 million. Explain what will happen to the portfolio’s beta, as well as the required rate of return for the portfolio. What you do expect to happen to the portfolio’s expected rate of return and its standard deviation?

## Answer This Question

## Related Questions

- Financial Management - You have a $2 million portfolio consisting of a $100,000 ...
- investing - You have a $ 2 million portfolio consisting of $100,000 investment ...
- Math Finance - We have two independent investments. Each of them may have a 1% ...
- Finance - Following are selected balance sheet accounts for Third State Bank: ...
- Finance - Rock Company acquired land 8 years ago for 2.2 million. Today it is ...
- Finance - I need help with this problem: 1. Hanster Inc. is a levered firm with ...
- calculating BETA - I am having the most trouble with this. Any help or direction...
- investing - You hold a diversified portfolio consisting of a $5 000 investment ...
- Investing - You hold a diversifield $ 100,000 portfolio consisting of 20 stocks ...
- Investing ( pease help) - You hold a diversified $ 100,000 portfolio consisting ...

More Related Questions