Example 3: The expected market risk premium is 11% and the expected retum on a stock with a beta of 0.97 is 16.3%. What is the risk-free rate? Example 4: Good Earth stock earned an annual return of 14% over the last five years. The stock's beta was 1.2, the riskfree rate averaged 3%, and the market return was 10%. Given 20-20 hind sight, would you have recommended a buy or a sell on the stock five years back? Example : Jun Middleton owns a 3-stock portfolio with a total investment value of $600,000. Stock Investment Beta A $100,000 0.5 B $300,000 1.0 C $200,000 1.5 Total $600,000 What is the beta of Jan's 3-stock portfolio