Portfolio Analysis

Assume that you have just received information from your investment advisor that your portfolio has reached a value of $2,250,000. Your portfolio consists of three stocks, as follows:

Stock	Amount Invested	Beta
A	$500,000	1.50
B	$750,000	1.05
C	$1,000,000	.95
Total:	$2,250,000

a. Calculate the beta of this investment portfolio.

b. Assume that the expected market return ( r m ) is 8 percent and the expected risk-

free rate ( RF ) is 3 percent. What is the expected return ( r j ) for this investment portfolio?