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Suppose you have a portfolio consisting of three stocks. You invest a total of $200,000 in the stocks. The investments and beta for the stocks
Suppose you have a portfolio consisting of three stocks. You invest a total of $200,000 in the stocks. The investments and beta for the stocks are shown in the following table. Use the table to complete parts (a) through (c) below. Stock Investment Beta 1 $60,000 1.25 2 $40,000 (0.5) 3 $100,000 1.5 (a) Assume the risk-free rate is 5.5% and the expected return for the market is 10%. Estimate the appropriate required rate of return for each stock. (b) Compute the portfolio beta. (c) Find the portfolio
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