Over the past several weeks you have assembled a small stock portfolio via the purchase ofsmall amounts of different company stocks. You know that the point of a portfolio is toreduce your overall exposure to systematic risk, but aren't sure exactly what the risk of yournew portfolio is. You have purchased the following: $9,000 of Ford Stock, $4,000 of JohnDeer Stock, and $2,000 of Health Care of America (HCA) Stock. You have estimated the betasof these stocks to be the following: a ẞ of 4.29 for Ford, a ẞ of 2.50 for John Deere, and a ẞof 2.2 for HCA. What is the beta of your portfolio? (Round to 2 decimals)Answer:

Step 1: Given Value for Calculation Value of Ford Stock = vf = $9000Value of John Deer Stock = vj =…

Answered: Over the past several weeks you have…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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James had an equity portfolio that contains $40,000 investment in Tesla (TSLA) and $60,000 investment in Microsoft (MSFT) since 2018. After seeing the stock market turmoil sparked by coronavirus, he contacted you and seek for some approaches to measure the expected losses of his portfolio. As his investment adviser, you decided to use the model building approach to measure the risk of James’ portfolio. What is the 10-day 97% value at risk for TSLA and MSFT, respectively?
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