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Assume AAA Inc. Has an equity Beta of 1.5, a standard deviation of returns of 0.18 and its current price is $35 per share. Assume BBB Inc. Has an equity Beta of 0.5 a standard deviation of returns of 0.15 and its current price is $15 per share. You decide to buy 100 shares of AAA Inc and 100 Share of BBB Inc.

3. What is your portfolios expected return?

Assume Risk free rate = 3% Equity market premium = 7 % Tax rate =21%