Question
You own a portfolio with shares in four companies: Pfizer, Walgreens, JP Morgan, and 3M. Information on each company's common stock is shown in the
You own a portfolio with shares in four companies: Pfizer, Walgreens, JP Morgan, and 3M. Information on each company's common stock is shown in the table below. Assume that the current yield on one-year T-Bills in the U.S. is 4.96%, and that the overall return of the U.S. stock market is currently 14.25%. Given this information, calculate the CAPM for each stock. Then, calculate the portfolio's beta. Finally, calculate the portfolio's expected return.
Stock | Share Price | Beta | # Shares Owned |
Pfizer | 36.81 | 1.95 | 440 |
Walgreens | 44.50 | 2.25 | 910 |
JP Morgan | 95.18 | 2.10 | 235 |
3M | 146.46 | 0.74 | 550 |
INSTRUCTIONS: Write dollar amounts out to the penny, with no dollar sign: 1000.00. All interest rates should be entered as follows: 11.28 (no percent sign).
For this problem:
Pfizer expected return =
Walgreens expected return =
JP Morgan expected return =
3M expected return =
Portfolio Beta =
Portfolio Return =
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