1. You are considering how to invest part of your retirement savings.You have decided to put $500,000 into three stocks: 52% of the money in GoldFinger (currently $23/share),12% of the money in Moosehead (currently $95/share), and the remainder in Venture Associates (currently $8/share). Suppose GoldFinger stock goes up to $32/share, Moosehead stock drops to $67/share, and Venture Associates stock rises to $9 per share.

a. What is the new value of the portfolio?

b. What return did the portfolio earn?

c. If you don't buy or sell any shares after the price change, what are your new portfolio weights?

2. Suppose Intel stock has a beta of 0.79, whereas Boeing stock has a beta of 1.24. If the risk-free interest rate is 6.3% and the expected return of the market portfolio is 11.4%, according to the CAPM,

a. What is the expected return of Intel stock?

b. What is the expected return of Boeing stock?

c. What is the beta of a portfolio that consists of 60% Intel stock and 40% Boeing stock?

d. What is the expected return of a portfolio that consists of 60% Intel stock and 40% Boeing stock? (There are two ways to solve this.)