The table below shows the betas and portfolio weights for 3 stocks:

		Portfolio weights
Stock	Beta	Portfolio 1	Portfolio 2
A	1.7	0.3	0.1
B	1.1	0.5	0.4
C	0.2	0.2	0.5

Calculate the beta of each portfolio.

Part 1

What is the beta of portfolio 2?

2.

Intro

A stock has a beta of 1.7. The risk-free rate is 2%. Assume that the CAPM holds.

Part 1

What is the expected return for the stock if the expected return on the market is 7%?

Part 2

What is the expected return for the stock if the expected market risk premium is 7%?