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You are putting together a portfolio made up of four different stocks. ? However, you are considering two possible? weightings: Portfolio Weightings Asset Beta First
You are putting together a portfolio made up of four different stocks. ? However, you are considering two possible? weightings:
| Portfolio Weightings |
| ||||
| Asset | Beta | First Portfolio | Second Portfolio | ||
| A | 2.50 | 10?% | 40?% | ||
| B | 1.00 | 10?% | 40?% | ||
| C | 0.50 | 40?% | 10?% | ||
| D | ?1.50 | 40?% | 10?% | ||
a. What is the beta on each? portfolio? b. Which portfolio is? riskier? c. If the? risk-free rate of interest were 4 percent and the market risk premium were 5 percent?, what rate of return would you expect to earn from each of the? portfolios?
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