Question: a. Determine the expected return and beta for the following portfolio: b. Given the foregoing information, draw the security market line and show where the

a. Determine the expected return and beta for the following portfolio:

b. Given the foregoing information, draw the security market line and show where the securities and portfolio fit on the graph. Assume that the risk- free rate is 2 percent and that the expected return on the market portfolio is 8 percent. How would you interpret these findings?

EXPECTED RETURN BETA 1.00 0.75 1.30 STOCK PERCENTAGE OF PORTFOLIO 12% 40% 25 35 15

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