A portfolio is characterized by the following:

Stock X Y Z

$'s invested

$2,000 $8,000 $2,000

Expected Return 15% 12% 8%

Beta 2.0 1.6 1.2

1. a)Calculate the portfolio's expected return.
2. b)Calculate the beta of the portfolio.

(3 marks) (3 marks)

c) If the return on the market is 10% and the risk-free rate is 3%, what is the required

rate of return on the portfolio?

(4 marks)