Question: Hi, can you solve this please, show calculations Problem 1 (22 pts) Talia has $800,000. Talia formed a portfolio by investing $150,000 in stock A,$200,000
Problem 1 (22 pts) Talia has $800,000. Talia formed a portfolio by investing $150,000 in stock A,$200,000 in stock B, $300,000 in stock C and $150,000 in stock D respectively. - The Market Expected return and standard deviation are as per the below: - E(rM)=12% and M=22% a) What should be the expected return on stock A, and stock C ? (4 pts) b) What should be the Beta of security B, and the Beta of security D? (4 pts) c) Calculate the firm specific standard deviation (e,B) for stock B, if stock B standard deviation (B) is equal to 49%, and the firm specific standard deviation (e,D) for stock D, if stock D standard deviation (D) is equal to 66%. (4 pts) d) Calculate the standard deviation (A) for stock A, and the standard deviation (C) for stock C. (4 pts) e) What should be the Beta of Talia's portfolio? ( 2pts) f) What should be the expected return on Talia's portfolio? ( 2 pts) g) What should be the market risk of Talia's portfolio? (2 pts)
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