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Question #2 Suppose you hold a portfolio that consists of 35% in Microsoft Co. stock, 35% in Treasury bills, and 30% Apple Co. stock. Microsoft's

Question #2

Suppose you hold a portfolio that consists of 35% in Microsoft Co. stock, 35% in Treasury bills, and 30% Apple Co. stock.

Microsoft's beta is 1 and Apple's beta is 0.5. Treasury bills (the risk- free asset) offer a return of 4% and the expected return on the market is 11.5%.

Required: As per the capital asset pricing model, what return should you expect on your portfolio?

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