Suppose you form a portfolio with $$1\mathrm{.}4$ million in Dell and $$0\mathrm{.}6$ million in HP$,$ what is the Required Return on the Portfolio?

Hint: Find the portfolio beta first and then apply the CAPM formula.

Year

Market

Dell

HP

$1$

$30\%$

$26\%$

$47\%$

$2$

$7$

$15$

$-54$

$3$

$18$

$-14$

$15$

$4$

$-22$

$-15$

$7$

$5$

$-14$

$2$

$-28$

$6$

$10$

$-18$

$40$

$7$

$26$

$42$

$17$

$8$

$-10$

$30$

$-23$

$9$

$-3$

$-32$

$-4$

$10$

$38$

$28$

$75$

A$.8\mathrm{.}05\%$

B$.9\mathrm{.}3\%$

C$.10\%$