Problem 12-6 Market Model

The following three stocks are available in the market:

	E(R)
Stock A	11.2	%	1.34
Stock B	14.4		1.14
Stock C	16.9		1.54
Market	14.8		1

Assume the market model is valid.

c-1.	The return on the market is 15.6 percent and there are no unsystematic surprises in the returns. What is the return on each stock? (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))

	Return
Stock A	%
Stock B	%
Stock C	%

c-2.

Assume a portfolio has weights of 25 percent Stock A, 40 percent Stock B, and 35 percent Stock C. The return on the market is 15.6 percent and there are no unsystematic surprises in the returns. What is the return on the portfolio? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Return on the portfolio

%