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Your client comes to you with the following exiting portfolio of three individual stocks: [Chap 13] Stocks in Portfolio Portfolio Weights CAPM Expected Returns Visa
Your client comes to you with the following exiting portfolio of three individual stocks: [Chap 13] Stocks in Portfolio Portfolio Weights CAPM Expected Returns Visa (financial processor) 40% 12% Sysco Corp (food service for restaurants) 30% 5% Costco (warehouse retail) 30% 14% 100% A. What is your clients expected portfolio return? B. Sysco has a beta of .4. If the risk-free rate is 2%, what must be the market risk premium according the Capital Asset Pricing Model (CAPM) if Sysco is expected to earn 5% like it shows in the table?
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