Portfolio beta and security market line$)$ You own a portfolio consisting of the stocks below:

S&P $500$ Index

MyLab

STOCK OR SECURITY

PERCENTAGE OF PORTFOLIO

BETA

EXPECTED RETURN

$20\%$

$1\mathrm{.}00$

$12\%$

$2$

$30\%$

$0\mathrm{.}85$

$8\%$

$3$

$15\%$

$1\mathrm{.}20$

$12\%$

$4$

$25\%$

$0\mathrm{.}60$

$7\%$

$5$

$10\%$

$1\mathrm{.}60$

$16\%$

The risk$-$free rate is $3$ percent. Also, the expected return on the market portfolio is $11$ percent.

a$.$ Calculate the expected return of your portfolio. $($Hint: The expected return of a portfolio equals the weighted average of the individual stocks' expected returns, where the weights are the percentage invested in each stock.$)$

b$.$ Calculate the portfolio beta.

c$.$ Given the foregoing information, plot the security market line on paper. Plot the stocks from your portfolio on your graph.

d$.$ From your plot in part $($c$),$ which stocks appear to be your winners and which one appear to be your losers?

e$.$ Why should you consider your conclusion in part $($d$)$ to be less than certain?