Do the Math 14-8 Beta Calculations
Michael Margolis is a single parent and motivational training consultant from Palatine, Illinois. He is wondering about potential returns on investments given certain amounts of risk. Michael invested a total of $9,000 in three stocks ($3,000 in each) with different betas: a stock with a beta of 0.8, a stock with a beta of 1.7, and a stock with a beta of 2.
If the stock market rises by 10 percent over the next year, what will be the likely value of each investment? Do not round your intermediate calculations. Round your answers to the nearest dollar: Stock A, Stock B, Stock C.
If the stock market declines by 8 percent over the next year, what will be the likely value of each of Michael's investments? Do not round your intermediate calculations. Round your answers to the nearest dollar: Stock A, Stock B, Stock C.