Question 2

Puan Siti Khadijah is holding a portfolio made up of the following stocks:

	Investment amount (RM)	Beta
Stock Abu Berhad	2,000	1.5
Stock Bakar Berhad	5,000	1.2
Stock Chan Berhad	3,000	0.80

From the above information, you are required to answer the following questions.

(a) What is the beta of the portfolio?

(b) Based on you answer in part (i), given that the markets expected return is 15%, and the risk-free rate is 6%. Compute the expected return on this portfolio using capital asset pricing model (CAPM).