Suppose the following conditions hold. The risk free rate is 4% and the market risk premium is

Question:

Suppose the following conditions hold. The risk free rate is 4% and the market risk premium is 6%. We have a portfolio containing three stocks and a risk-free asset. We have $50 of the risk-free asset, $100 of A (B = 1.2), -$200 of B (B = 1.10) and $150 of C (B = 0.9). Find the net dollar investment, the portfolio's expected return and B. How can we replicate this portfolio using only the risk free asset and the market portfolio?

Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing... Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...