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Please answer fully You have recently inherited the following portfolio: Stock Investment Stocks Beta A $275,000,000 1.2 B $125,000,000 1 C $100,000,000 0.9 The probability
Please answer fully
You have recently inherited the following portfolio: | ||||||
Stock | Investment | Stocks Beta | ||||
A | $275,000,000 | 1.2 | ||||
B | $125,000,000 | 1 | ||||
C | $100,000,000 | 0.9 | ||||
The probability distribution of the expected market returns and the risk-free rate for the next period are: | ||||||
Probability | Market Return | Risk-Free Rate | ||||
0.25 | 8.00% | 3.00% | ||||
0.55 | 10.00% | 3.00% | ||||
0.2 | 12.00% | 3.00% | ||||
What is the beta of the portfolio? What is the expected market return? Using the Security Market Line equation, compute the portfolios required rate of return for the next period. | ||||||
Use the scratchpad to show your work in Excel. Type your numercial answer into the yellow cells below. Answers should be to two decimal places, e.g. 1.23% or $123.45. | ||||||
Portfolio's Beta? | ||||||
Expected Market Return? | ||||||
Portfolio's Required Rate of Return? | ||||||
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