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You expect the inflation rate to be 2.9 percent and the U.S. Treasury bill yield to be 2.3 percent for the next year. The risk

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You expect the inflation rate to be 2.9 percent and the U.S. Treasury bill yield to be 2.3 percent for the next year. The risk premium on small-company stocks is 11.4 percent. What nominal rate of return do you expect to earn on small-company stocks next year? A stock has a beta of 1.24, an expected return of 13.60 percent, and lies on the security market line. A risk-free asset is yielding 2.8 percent. You want to create a $6,000 portfolio consisting of Stock A and the risk-free security such that the portfolio beta is 0.83. What rate of return should you expect to earn on your portfolio

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