Question
You are putting together a portfolio made up of four different stocks. However, you are considering two possible weightings:CHART BELOW a.What is the beta on
You are putting together a portfolio made up of four different stocks. However, you are considering two possible weightings:CHART BELOW
a.What is the beta on each portfolio?
b.Which portfolio is riskier?
c.If the risk-free rate of interest were 5 percent and the market risk premium were 7.5 percent, what rate of return would you expect to earn from each of the portfolios?
| Portfolio Weightings |
| |||
| Asset | Beta | First Portfolio | Second Portfolio | |
| A | 2.40 | 12% | 38% | |
| B | 0.90 | 12% | 38% | |
| C | 0.45 | 38% | 12% | |
| D | 1.60 | 38% | 12% | |
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Behavioral Finance And Capital Markets
Authors: A. Szyszka
5th Edition
1137338741, 9781137338747
