The table below gives the amount invested and betas for three stocks.

Stock Amount Invested Beta

GM K10, 000 1.2

IBM K10, 000 1.0

WMT K20, 000 0.7

REQUIRED:

1. Using the CAPM, if the expected return for the market is 6% and the risk-free rate is 1.5%, what is the expected return for each stock?
2. What is the beta for this portfolio based on the invested amounts?
3. Using the CAPM, what is the expected return for this portfolio?