FIN2001 Financial Management Supplementary Exercise 8 (Topic 10) /12 1. Calculate the portfolio beta with the following information: (3 marks) Stocks Value Beta $8,000 0.88 3,000 1.1 1.4 2,000 1,000 D 0.65 2. Using the CAPM equation, if the stock beta is 1.25, return on market portfolio is 12%, risk-free rate is 2.5%, calculate the expected return on this stock and the equilibrium reward to risk ratio. (6 marks) 3. If you invest in a portfolio made up of 50% of this stock and 50% of a risk-free asset, calculate the beta of this portfolio