As a first day intern at Tri-Star Management Incorporated the CEO asks you to analyze the...

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As a first day intern at Tri-Star Management Incorporated the CEO asks you to analyze the following information pertaining to the three common stock investments, Portfolio A, Portfolio B and Portfolio C. You are told that the portfolio will have a market portfolio expected return is 12 percent. Also, the information from an investment advising service lists the current beta as per below table. Assuming the risk-free is 8 percent. Portfolio Beta A 0.6 B 1.0 C 1.4 You are required to: (a)Calculate the expected return using Capital Asset Pricing Model (CAPM) for each of the portfolio based the beta given for each portfolio. (4 marks) (b)Referring to the answers in (a), draw a graph to reflex the portfolio of expected return. (3 marks) (c) Indicate with the graph what would happen to the capital market line expected return on the market portfolio were 10 percent (3 marks) the As a first day intern at Tri-Star Management Incorporated the CEO asks you to analyze the following information pertaining to the three common stock investments, Portfolio A, Portfolio B and Portfolio C. You are told that the portfolio will have a market portfolio expected return is 12 percent. Also, the information from an investment advising service lists the current beta as per below table. Assuming the risk-free is 8 percent. Portfolio Beta A 0.6 B 1.0 C 1.4 You are required to: (a)Calculate the expected return using Capital Asset Pricing Model (CAPM) for each of the portfolio based the beta given for each portfolio. (4 marks) (b)Referring to the answers in (a), draw a graph to reflex the portfolio of expected return. (3 marks) (c) Indicate with the graph what would happen to the capital market line expected return on the market portfolio were 10 percent (3 marks) the

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a To calculate the expected return using the Capital Asset Pricing Model CAPM we can use the followi... View the full answer