Question
Given the following information for the two stocks: Stock Investment Beta A $30,000 1.2 B $20,000 0.8 Assume the risk-free rate is 3 percent and
Given the following information for the two stocks:
Stock Investment Beta
A $30,000 1.2
B $20,000 0.8
Assume the risk-free rate is 3 percent and the market risk premium is 9%. A portfolio is constructed according to the amount stated in the investment column. What is the expected return of portfolio AB, given that CAPM holds?
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Introduction To Corporate Finance
Authors: Laurence Booth, Sean Cleary
3rd Edition
978-1118300763, 1118300769
