Question 4

Suppose you have invested in the following four stocks

Stock	Amount invested ( no. of shares )	Par value per share ( RM )	Market value per share ( RM )	Beta factor
JPS	10,000	1.00	5.25	2.2
I&P	20,000	1.00	4.50	1.7
SPP	30,000	0.50	2.20	0.9
MTC	15,000	1.00	6.10	2.5

The required return on the market is 9% and the risk-free rate is 3%.

Required:

Based on CAPM,

a. What is the expected return on stock JPS?

b. What is the portfolios beta factor?

c. What is the expected return on the portfolio?