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Company Return Shares Price AAA 6.50% 200 54 Axe 7.80% 100 120 BR Co. 11.00% 400 30 Basil, Inc 12.65% 500 450 Temple 20.50% 300

Company Return Shares Price AAA 6.50% 200 54 Axe 7.80% 100 120 BR Co. 11.00% 400 30 Basil, Inc 12.65% 500 450 Temple 20.50% 300 100 If the risk premium on the market is 5.5% and the risk-free rate is 2.00% What is the return on your portfolio? What is the Beta of the portfolio? If you decide to sell your Temple Stock and replace it with a stock (trading at $50 per share; using the entire proceeds to buy the new shares) that has a Beta of 1.20, what would the beta of your portfolio be and what is its new expected return on your portfolio?

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