Question

If a two-stock portfolio is equally invested in stocks with Betas of 1.4 and 0.7, then the portfolio Beta is: O 0.70 1.05. 1.40 2.10 Question 2 (1 point) An investor receives a 15 percent total return by purchasing a stock for $40 and selling it after one year with a 10 percent capital gain. How much was received in dividend income during the year? O $2.00 $2.20 $4.00 $6.00

Answer 1

Question 1
Lets assume two stock a and b
Weight of stocks
Wa=	0.5
Wb=	0.5
Beta of stock a (Ba)=	1.4
Beta of stock b (Bb)=	0.7
Portfolio Beta=	Wa*Ba+ Wb*Bb
=	0.5*1.4+0.5*0.7
=	1.05
Therfore answer would be 1.05
Question 2
Total Return=	15%
Purchase price=	$40
Capital gain=	10%
After One Year Price	=$40 +$40*10%
=	$ 44
Total Return=	Dividen Income+ Capital gain Income        ( Year End Price- Purchase Price)
	Purchase Price
15%=	Dividen Income+ ($44-$40)
	$40
Dividen Income=	$ 2
Therfore answer would be $2