Portfolio return and beta Personal Finance Problem Jamie Peters invested $$113,000$ to set up the following portfolio one year ago:

a$.$ Calculate the portfolio beta on the basis of the original cost figures.

b$.$ Calculate the percentage return of each asset in the portfolio for the year.

c$.$ Calculate the percentage return 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 return 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 figures is $($Round to two decimal places.$)$

b$.$ The percentage return for asset A for the year is $\%.($Round to two decimal places.$)$

The percentage return for asset $B$ for the year is $\%.($Round to two decimal places.$)$

The percentage return for asset $C$ for the year is $\%.($Round to two decimal places.$)$

The percentage return for asset $D$ for the year is $\%.($Round to two decimal places.$)$

c$.$ The percentage return of the portfolio on the basis of original cost, using income and gains during the year is $\%.($Round to two decimal places.$)$

d$.$ At the time 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 $A$ is $\%.($Round to two decimal places.$)$

The expected rate of return for asset $B$ is $\%.($Round to two decimal places.$)$

The expected rate of return for asset $C$ is $\%.($Round to two decimal places.$)$

The expected rate of return for asset $D$ is $\%.($Round to two decimal places.$)$

e$.$ What factors could explain the differences between the actual returns of the assets and the CAPM expected returns? $($Select the best answer below.$)$

A$.$ The beta, as a single measure, may not capture all the systematic factors that cause the expected return.

B$.$ The firm's 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.