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Facebook (FB) has a beta of 1.28, and Proctor & Gamble (PG) has a beta of 0.35. You receive a sign-up bonus of $4,000 for
Facebook (FB) has a beta of 1.28, and Proctor & Gamble (PG) has a beta of 0.35. You receive a sign-up bonus of $4,000 for your first job, which you decide to invest in a portfolio of FB and PG stock. Being a risk-loving investor, you invest $3,000 in FB and $1,000 in P&G. What return can you expect on your portfolio if the risk-free rate is 2 per cent and the return on the S&P 500 index is 11 per cent?
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