Question: Please answer 2 and 3 Daniel have established an investment portfolio of two stocks A and B five years ago. Required: Assume that expected return
Please answer 2 and 3 Daniel have established an investment portfolio of two stocks A and B five years ago. Required: Assume that expected return of the stock A in his portfolio is 13.2%. The risk premium on the stocks of the same industry are 4.6%, the risk-free rate of return is 4.8% and the inflation rate was 1.5. Calculate beta of this stock using Capital Asset Pricing Model (CAPM)? Assume that Daniel bought 3,000 stock B in the portfolio for total investment of $12,000, now the market price of the stock is $15, the dividend paid for this stock is $2 each year. Calculate the total rate of return of this stock? Assume that the following data available for the portfolio, calculate the expected return, variance and standard deviation of the portfolio given stock A accounts for 35% and stock B accounts for 65% of your portfolio? (4 marks) A B Expected return 19.5% 12.5% Standard Deviation of return 7% 2.5% Correlation of coefficient (p) 0.45
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