Given the following information for the two stocks: Stock Investment Beta A $30,000 1.2 B $20,000 0.8
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Question:
Given the following information for the two stocks:
Stock Investment Beta
A $30,000 1.2
B $20,000 0.8
Assume the risk-free rate is 3 percent and the market risk premium is 9%. A portfolio is constructed according to the amount stated in the investment column. What is the expected return of portfolio AB, given that CAPM holds?
Related Book For
Introduction To Corporate Finance
ISBN: 9781118300763
3rd Edition
Authors: Laurence Booth, Sean Cleary
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