(Portfolio beta and security market line) You own a portfolio consisting of the following stocks: 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 retum of a portfolio equals the weighted average of the individual stocks' expected retums, where the weights are the percentage Invested in each stock.) b. Calculate the portfolio beta. G. Given the foregoing information, plot the security market line. Plot the stocks from your portfolio on your graph. d. From your plot in parte, which stocks appear to be your winners and which ones appear to be losers? e. Why should you consider your conclusion in part d to be less than certain? a. What is the expected return of your portfolio? % (Round to two decimal places.) b. What is the beta of your portfolio? (Round to two decimal places.) c. Given that the stocks from your portfolio have been plotted on the graph below, draw the security market line on the graph. Note that you can click the magnifying glass button to enlarge the graph and use the Line Drawing Tool in the palette draw the line Security Market Line Q 3 Expected return (%) w.. : (Portfolio bela and security market line) You own a portfolio consisting of the following stocks: The risk-free rate is 3 percent. Also, the expected return on the market portfolio is 11 percent. each stock.) a. Calculate the expected retum of your portfolio. (Hint: The expected retum of a portfolio equals the weighted average of the individual stocks' expected returns, where the weights are the percentage invested b. Calculate the portfolio beta c. Given the foregoing information, plot the security market line. Plot the stocks from your portfolio on your graph. d. From your plot in part, which stocks appear to be your winners and which ones appear to be losers? e. Why should you consider your conclusion in part d to be less than certain? Security Market Line 30 5 25 20 15 4 10 5 0.5 1.5 Beta d. From your plot in part c, which stacks appear to be your winners and which ones appear to be losers? Stock 1 is a (Select from the drop-down menu.) (Portfolio beta and security market line) You own a portfolio consisting of the following stocks: E. The risk-free rate is 3 percent. Also, the expected return on the market portfolio is 11 percent. your graph. 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. Plot the stocks from your portfolio on d. From your plot in part c, which stocks appear to be your winners and which ones appear to be losers? e. Why should you consider your conclusion in part d to be less than certain ? 0.5 15 Beta d. From your plot in part c, which stocks appear to be your winners and which ones appear to be losers? Stock 1 is a V (Select from the drop-down menu.) Stock 2 is a (Select from the drop-down menu.) Stock 3 is a (Select from the drop-down menu.) Stock 4 is a (Select from the drop-down menu.) Stock 5 is a it from the drop-down menu.) loser. e. Why shou winner our conclusion in part d to be less than certain? (Select the best choice below.) O A. The results are less than certain because it is possible to misspecify the security market line by using bad estimates in the data. OB. The results are less than certain because the market data is not possible abtain O C. The results are less than certain because the investor's preference toward risk is hard to estimate OD. The results are less than certain because the capital asset pricing model is based on some unrealistic assuptions. (Portfolio beta and security market line) You own a portfolio consisting of the following stocks: 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 retum of a portfolio equals the weighted average of the individual stocks' expected retums, where the weights are the percentage Invested in each stock.) b. Calculate the portfolio beta. G. Given the foregoing information, plot the security market line. Plot the stocks from your portfolio on your graph. d. From your plot in parte, which stocks appear to be your winners and which ones appear to be losers? e. Why should you consider your conclusion in part d to be less than certain? a. What is the expected return of your portfolio? % (Round to two decimal places.) b. What is the beta of your portfolio? (Round to two decimal places.) c. Given that the stocks from your portfolio have been plotted on the graph below, draw the security market line on the graph. Note that you can click the magnifying glass button to enlarge the graph and use the Line Drawing Tool in the palette draw the line Security Market Line Q 3 Expected return (%) w.. : (Portfolio bela and security market line) You own a portfolio consisting of the following stocks: The risk-free rate is 3 percent. Also, the expected return on the market portfolio is 11 percent. each stock.) a. Calculate the expected retum of your portfolio. (Hint: The expected retum of a portfolio equals the weighted average of the individual stocks' expected returns, where the weights are the percentage invested b. Calculate the portfolio beta c. Given the foregoing information, plot the security market line. Plot the stocks from your portfolio on your graph. d. From your plot in part, which stocks appear to be your winners and which ones appear to be losers? e. Why should you consider your conclusion in part d to be less than certain? Security Market Line 30 5 25 20 15 4 10 5 0.5 1.5 Beta d. From your plot in part c, which stacks appear to be your winners and which ones appear to be losers? Stock 1 is a (Select from the drop-down menu.) (Portfolio beta and security market line) You own a portfolio consisting of the following stocks: E. The risk-free rate is 3 percent. Also, the expected return on the market portfolio is 11 percent. your graph. 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. Plot the stocks from your portfolio on d. From your plot in part c, which stocks appear to be your winners and which ones appear to be losers? e. Why should you consider your conclusion in part d to be less than certain ? 0.5 15 Beta d. From your plot in part c, which stocks appear to be your winners and which ones appear to be losers? Stock 1 is a V (Select from the drop-down menu.) Stock 2 is a (Select from the drop-down menu.) Stock 3 is a (Select from the drop-down menu.) Stock 4 is a (Select from the drop-down menu.) Stock 5 is a it from the drop-down menu.) loser. e. Why shou winner our conclusion in part d to be less than certain? (Select the best choice below.) O A. The results are less than certain because it is possible to misspecify the security market line by using bad estimates in the data. OB. The results are less than certain because the market data is not possible abtain O C. The results are less than certain because the investor's preference toward risk is hard to estimate OD. The results are less than certain because the capital asset pricing model is based on some unrealistic assuptions