1) You wish to invest in a portfolio of stocks A (50%) and B (50%). The risk free rate is 4%.

A B

Expected return (%) 10 20

Beta 1.2 1.8

Correlation coefficient between returns 0.3

Whats the portfolio return?

a)24%

b)

30%

c)11%

d) 15%

2) Whats the portfolio beta in Question 1?

a)

3

b)

1.5

c)

1.2

d) 1.8