You want to construct a portfolio containing equal amounts of U. S. Treasury bills and two stocks. If the beta of the first stock is 1.23 and the beta of the portfolio is 1.0, what does the beta of the second stock have to be

the beta of the second stock is 1.77

Explanation:

The beta of the second stock is shown below;

Investment in each = (1 ÷ 3)

Now as we know that

Portfolio beta = Respective investments × Respective weights

1 = (1 ÷ 3 × 1.23) + (1 ÷ 3 × beta of the second stock) + (1 ÷ 3 × 0)

We assume the Beta of risk-free assets would be zero

1 = 0.41 + (1 ÷ 3 × beta of the second stock)

The beta of the second stock is

= (1 - 0.41) × 3

= 1.77

Hence, the beta of the second stock is 1.77

lbc corporation makes and sells a product called product wz. each unit of product wz requires 4.1 hours of direct labor at the rate of $20.00 per direct labor-hour. management would like you to prepare a direct labor budget for june. the company plans to sell 28,000 units of product wz in june. the finished goods inventories o