Question
Your investment club has only two stocks in its portfolio. $10,000 is invested in a stock with a beta of 0.5, and $40,000 is invested
Your investment club has only two stocks in its portfolio. $10,000 is invested in a stock with a beta of 0.5, and $40,000 is invested in a stock with a beta of 1.8. What is the portfolio's beta? Do not round intermediate calculations. Round your answer to two decimal places.
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Required Rates of Return
Suppose that the risk-free rate is 6.5% and that the market risk premium is 6%.
1. What is the required return on the market? Round your answer to two decimal places.
2. What is the required return on a stock with a beta of 1.2? Round your answer to two decimal places.
3. What is the required return on a stock with a beta of 1.4? Round your answer to two decimal places.
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