I'm stuck figuring out how to solve the homework problem below: John's investmentportfoliohas total capital of $2,000,000
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Question:
I'm stuck figuring out how to solve the homework problem below:
John's investmentportfoliohas total capital of $2,000,000 invested inthree stocks:
Stock
Amount Invested
Beta
A
$1,000,000
1.6
B
$800,000
2.2
C
$200,000
0.3
Currently, the risk-free return is 3 percent and the expected market rate of return is 9 percent.
a. Compute the beta coefficient of the portfolio
b. What is the estimated equation for the Security Market Line?
c. Compute the portfolio's required rate of return (see part b)
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