Question
A portfolio composed of the stocks below earned a return of 12.00% last year, while the S&P 500 earned 9.00%. The portfolio manager has asked
A portfolio composed of the stocks below earned a return of 12.00% last year, while the S&P 500 earned 9.00%. The portfolio manager has asked you for a performance bonus as he beat the S&P 500. The risk free rate was 4.00% last year, while the market portfolio risk premium was 6.00%. Lets evaluate his claim.
PORTFOLIO:
| STOCK | BETA | DOLLARS INVESTED |
|---|---|---|
| Volunteer (VOL) | 1.50 | $2,000.00 |
| Bulldog (DOG) | 1.40 | $2,000.00 |
| Commodore (DORE) | 2.00 | $4,000.00 |
What was the beta of his portfolio?
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Investments An Introduction
Authors: Herbert B. Mayo
12th edition
1305638417, 978-1337430937, 1337430935, 978-1305638419
