Jamil Pasha invested US$100,000 to set up the following portfolio one year ago.

a. Calculate the portfolio beta on the basis of the original cost figures.
b. Calculate the percentage return of each asset in the portfolio for the year.
c. Calculate the percentage return of the portfolio on the basis of original cost, using income and gains during the year.
d. At the time Jamil made his investments, investors were estimating that the market return for the coming year would be 10 percent. The estimate of the risk-free rate of return averaged 4 percent for the coming year. Calculate an expected rate of return for each stock on the basis of its beta and the expectations of market and risk-free returns.
e. On the basis of the actual results, explain how each stock in the portfolio per- formed relative to those CAPM-generated expectations of performance. What factors could explain these differences?

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Yearly Asset Cost Beta at purchase income Value today A US$20,000 35,000 30,000 15,000 0.80 0.95 1.50 1.25 USS1,600 USS20,000 1,400 36,000 34,500 16,500 375