The following three stocks are available in the market: Assume the market model is valid. a. Write

Question:

The following three are available in the market:

The following three stocks are available in the market:

Assume the market model is valid.

a. Write the market model equation for each stock.

b. What is the return on a portfolio with weights of 30 percent Stock A, 45 percent Stock B, and 25 percent Stock C?

c. Suppose the return on the market is 15 percent and there are no unsystematic surprises in the returns. What is the return on each stock? What is the return on the 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... 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...