Question
Expected return of a portfolio using beta. The beta of four stocksG, H, I, and Jare 0.46, 0.73, 1.24, and 1.65, respectively and the beta
Expected return of a portfolio using beta. The beta of four stocksG, H, I, and Jare 0.46, 0.73, 1.24, and 1.65, respectively and the beta of portfolio 1 is 1.02, the beta of portfolio 2 is 0.84, and the beta of portfolio 3 is 1.18. What are the expected returns of each of the four individual assets and the three portfolios if the current SML is plotted with an intercept of
4.5% (risk-free rate) and a market premium of10.5% (slope of the line)?
What is the expected return of stock G?
What is the expected return of stock H?
What is the expected return of stock I?
What is the expected return of stock J?
What is the expected return of portfolio1?
What is the expected return of portfolio2?
What is the expected return of portfolio3?
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