45.46. Portfolio Analysis

Assume that you have just received information from your investment advisor that your portfolio has reached a value of $500,000. Your portfolio consists of three stocks, as follows:

Stock	Amount Invested	Beta
A	$235,000	1.25
B	$190,000	1.10
C	$75,000	.50
Total:	$500,000

a. Calculate the beta of this investment portfolio.

b. Assume that the expected market return ( r m ) is 12 percent and the expected risk-free rate

( RF ) is 6 percent. What is the expected return ( r j ) for this investment portfolio?