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W R St.Dev Beta Alpha HELX 30% 4.36% 10.83% 1.35 2.54% LMT 30% 1.48% 5.04% 0.23 0.66% COST 40% 1.87% 6.21% 1.32 0.08% Optimal 3-stock

W R St.Dev Beta Alpha

HELX 30% 4.36% 10.83% 1.35 2.54%

LMT 30% 1.48% 5.04% 0.23 0.66%

COST 40% 1.87% 6.21% 1.32 0.08%

Optimal 3-stock porfolio

S&P 500

Risk Free Scurity

Write out CAPM equation based on historical data for the above portfolio.

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Ri = 0.6 - Betai (3.1 0.6)

Ri = 0.6 + 3.1 ( i )

Ri = 0.6 + Betai (1.00)

Ri = 0.6 + Betai (1.50 0.6)

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