# Question: You hold the positions in the following table What is

You hold the positions in the following table. What is the beta of your portfolio? If you expect the market to earn 12 percent and the risk-free rate is 3.5 percent, what is the required return of the portfolio?

This problem can be solved two different and equivalent ways. Both ways require the weights of the stocks in the portfolio. In one method, compute the required return for each stock and then use the weights to form the portfolio required return. The other solution uses the weights to compute the portfolio beta. This portfolio beta is used to compute the portfolio required return. The solution below shows the portfolio beta approach.

This problem can be solved two different and equivalent ways. Both ways require the weights of the stocks in the portfolio. In one method, compute the required return for each stock and then use the weights to form the portfolio required return. The other solution uses the weights to compute the portfolio beta. This portfolio beta is used to compute the portfolio required return. The solution below shows the portfolio beta approach.

**View Solution:**## Answer to relevant Questions

Using the information in the table, compute the required return for each company using both CAPM and the constant growth model. Compare and discuss the results. Assume that the market portfolio will earn 12 percent and the ...For the same economic state probability distribution in Problem, determine the standard deviation of the expected return.In Problem, Compute the expected return given these three economic states, their likelihoods, and the ...Suppose your firm wanted to expand into a new line of business quickly, and that management anticipated that the new line of business would constitute over 80 percent of your firm’s operations within three years. If the ...ILK has preferred stock selling for 97 percent of par that pays an 8 percent annual coupon. What would be ILK’s component cost of preferred stock?Suppose that JB Cos. has a capital structure of 78 percent equity, 22 percent debt, and that its before-tax cost of debt is 11 percent while its cost of equity is 15 percent. If the appropriate weighted average tax rate is ...Post your question