Portfolio return and beta: Personal Finance Problem Jamie Peters invested $116,000 to set up the following portfolio one year ago a Calculate the portfolio beta on the basis of the original cost figures. 6. Calculate the percentage return of each asset in the portfolio for the year. c.Calculate the percentage retum of the portfolio on the basis of original cost, using income and gains during the year. d.At the time Jamie made his investments, investors were estimating that the market return for the coming year would be 10%. The estimate of the risk-free rate of retum averaged 4% for the coming year. Calculate an expected rate of return for each stock on the basis of its beta and the expectations of market and risk-free returns e.On the basis of the actual results, explain how each stock in the portfolio performed differently relative to those CAPM-generated expectations of performance What factors could explain these differences? A The portfolio beta on the basis of the original cost Higures is B. The percentage return for asset for the year is _96 The percentage return for asset B for the year is _% The percentage return for asset for the year is _% The percentage return for asset for the year is _% C. The percentage return of the portfolio on thw basis of original cost, using incone and gains during the year is D. At the tome Jamie made his investments, investors were estimating that the market return for the coming year would be 10% and the estimate of the risk-free rate of return averaged 4% for the coming year The expected rate of return for asset Ais_% The expected rate of return for asset Bis% The expected rate of return for asset Cis_% E. What factors could explain the differences between the actual returns of the assets and CAPM expected returns? A. The beta, as a single measure, may not capture all the systematic factors that caused the expected return B. Any underperformance could be due to any unsystematic factors that caused the expect return The firms characteristics may have changed such that the beta at the time of the purchase either overstated or understated the true value of beta that existed during that Year All of the above Asset A B D Cost $35,000 $30,000 $38,000 $13,000 Beta at purchase 0.78 0.96 1.52 1.34 Yearly income $1,200 $1,600 $0 $425 Value today $35,000 $31,000 $44,500 $13,500