You own a portfolio which is 30 percent invested in U.S. Treasury bills, 20 percent invested in

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You own a portfolio which is 30 percent invested in U.S. Treasury bills, 20 percent invested in Stock A which has a beta of 1.21 and 20 percent invested in stock B which has a beta of .89. The balance is invested in stock C, which is equally as risky as the market. The risk-free rate of return is 4.5 percent and the expected return on the market is 12 percent. What is the beta of the portfolio?
a.
.42
b. .72
c. 1.02
d. 1.22

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...
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Corporate Finance Core Principles and Applications

ISBN: 978-0077905200

3rd edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford

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