(Portfolio beta and CAPM)You are putting together a portfolio made up of four different stocks. However, you are considering two possible weightings:

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.

a.What is the beta on each portfolio?

b.Which portfolio is riskier?

c.If the risk-free rate of interest were

4.5

percent and the market risk premium were

7

percent,

what rate of return would you expect to earn from each of the portfolios?

Portfolio Weightings
Asset	Beta		First Portfolio	Second Portfolio
A	2.40		20%	30%
B	0.85		20%	30%
C	0.40		30%	20%
D	1.70		30%	20%

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