Stock

Number of Shares

Price per Share Expected Return

Beta

A

150

B

400

C

200

D

350

$23

12.8%

1.03

37

3.6%

0.11

42

9.8%

0.73

16

24.5%

2.2

The risk-free rate is 2.5% and the expected return on the market is 12.5%.

In answering the questions below, please show your work.

1. What is the expected return on the portfolio? (5 points)

2. What is the beta of the portfolio? (4 points)