GB550
5-2) Wilson Wonder’s bonds have 12 years remaining to maturity. Interest is
paid annually, the bonds have a $1,000 per value, and the coupon interest rate
is 10%. The bonds sale at a price of $850. What is their yield to maturity?
6-7) Suppose rRF= 5%, rM= 10%, and rA= 12%
a) Calculate Stock A’s beta
b) If stock A’s beta were
2.0, then what would be A’s new required rate of return?
6-11) You have a $2 million portfolio consisting of a $100,000 investment
in each of 20 stocks. The portfolio has a beta of 1.1. You are considering
selling $100,000 worth of one stock with
a beta of 0.9 and using the proceeds to purchase another stock with a beta of
1.4. What will the portfolio’s new beta be after these transactions?
