Question 1: An investor wants to evaluate the $3 million portfolio described below:

Stock	Stock's Beta	Portfolio Composition
1	1.2	$600,000
2	0.6	$300,000
3	1.35	$750,000
4	1.5	$250,000
5	0.8	$1,100,000
	Total:	$3,000,000

The market rate of return is 12 % and the risk free rate is 3.25%.

Compute the expected return of each of the 5-assets (using CAPM).

Compute the weighted-average return for this 5-asset portfolio.

Compute the weighted-average beta and the expected return for this 5-asset portfolio.

How do your answers to 2 and 3 differ? Explain.