Question
Assume that you have just received information from your investment advisor that your portfolio has reached a value of $2,500,000 . Your portfolio consists of
Assume that you have just received information from your investment advisor that your portfolio has reached a value of $2,500,000. Your portfolio consists of three stocks, as follows:
| Stock | Amount Invested | Beta |
| A | $600,000 | 1.45 |
| B | $700,000 | 1.15 |
| C | $1,200,000 | .65 |
| Total: | $2,500,000 |
|
a. Calculate the beta of this investment portfolio.
b. Assume that the expected market return ( r m ) is 8 percent and the expected risk-
free rate ( RF ) is 3 percent. What is the expected return ( r j ) for this investment portfolio?
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Financial and Management Accounting
Authors: Pauline Weetman
7th edition
1292086599, 978-1292086590
