Chapter 8 Risk and Return %E Calculating Return rt (Ct Pt Pt-1) Pt.1 Company Beg value End Value Pt Dividend 0% Return IBM $80.00 $87.00 $1.00 IBM $105.00 $2.50 $94.00 $10.00 $15.50 ADFEE $25.00 S1875 $0.50 SDFBE CAPM RRRERER Beta x Market Return-RERI Stock B Stock C Stock A 4.0% 2.5% 2.5% Risk Free Rate 1.00 2.000 1.25 BETA 80% 13% 1.40% Market Return 4.0% 3.5%, 2.5% Risk Free Rate s Invested Investment Return% Portfolio Return Stock $5,200 25.0% Stock B $4,100 10.0% Stock C $3,800 3.0%, Stock D $7,200 11.00%, Total Portfolio $20,300 Portfolio Return Return Investment Portfolio Return Invested Stock $2,500 18.0% Stock E $4,500 g. Stock C $3,500 5.000%, Stock D $5,500 14.1% $16,000 Portfolio Return Total Portfolio Stock Price Stock Market Re New Stock Price BETA 2.25 5.00 100% 1.5 $32.00 250% 075 $15.00 150% Beta Investment Portfolio Beta Invested Stock C $3,500 0.8 Stock D 20,000 Total Portfolio Portfolio Return