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(b) You are considering an investment portfolio consisting of the following stocks: The risk free rate is 6 percent and the market risk premium is
(b) You are considering an investment portfolio consisting of the following stocks: The risk free rate is 6 percent and the market risk premium is 9 percent. (i) Calculate the expected return on this portfolio. (3 marks) (ii) Calculate the beta of this portfolio. (3 marks) (iii) Determine whether this portfolio have more or less systematic risk than an average asset. (2 marks) (iv) Using the capital asset pricing model (CAPM), determine the required rate of return on the portfolio. (3 marks) (v) The portfolio is expected to earn an annual rate of return of 15%. Based on this portfolio, calculate to decide whether you would invest
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