Question 8

Your brother wants to invest in the stock market. Initially, he wanted to put all his piggy bank money into one company, however you told him that it would be better to hold a portfolio of many different shares. He is quite stubborn and only wants to invest in his favorite 4 companies. He has decided the amount of wealth he is going to put into each, and he has asked you to estimate the expected return on his proposed portfolio. You have collected the beats for all of his companies.

Company	Total value of shares	Beta	Standard deviation
Adidas	$800	0.7	45%
Tesla	$100	1.3	23%
Wholefoods	$800	1.1	69%
GoSun	$200	1.5	88%

In addition, you found the 10-yr government bond yield to be 5% p.a. and you estimate the market risk premium to be 7%. What is the expected return of your brothers portfolio?

if i could get some help with this question

thanks