Question: PLEASE HELP ME QUESTION 3 (a) Calculate beta and required rate of returns of the respective portfolio by using Capital Asset Pricing Model (CAPM). Assume

PLEASE HELP ME

PLEASE HELP ME QUESTION 3 (a) Calculate beta and required rate of

QUESTION 3 (a) Calculate beta and required rate of returns of the respective portfolio by using Capital Asset Pricing Model (CAPM). Assume that a beta of 1.45 and 0.76 for Stock A and Stock B respectively. A return on a market portfolio (Rm) of 9 percent and a risk-free rate (Rf) of 2 percent. (Calculations must be done manually. Show all workings: Portfolio: P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 P11 Stock A 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Stock B 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Beta Bp1 BP2 Bp3 BPA Bps BP6 BP7 Bps Bpg BP10 BP11 Required Return Rp1 Rp2 Rp3 Rp4 Rp5 Rp6 RPZ RDP8 Rpg Rp 10 Rp11 (22 marks) (b) Which portfolio(s) is/are good to create? Provide a reason. (4 marks) (c) Which portfolio(s) is/are overvalued and undervalued? (11 marks) QUESTION 3 (a) Calculate beta and required rate of returns of the respective portfolio by using Capital Asset Pricing Model (CAPM). Assume that a beta of 1.45 and 0.76 for Stock A and Stock B respectively. A return on a market portfolio (Rm) of 9 percent and a risk-free rate (Rf) of 2 percent. (Calculations must be done manually. Show all workings: Portfolio: P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 P11 Stock A 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Stock B 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Beta Bp1 BP2 Bp3 BPA Bps BP6 BP7 Bps Bpg BP10 BP11 Required Return Rp1 Rp2 Rp3 Rp4 Rp5 Rp6 RPZ RDP8 Rpg Rp 10 Rp11 (22 marks) (b) Which portfolio(s) is/are good to create? Provide a reason. (4 marks) (c) Which portfolio(s) is/are overvalued and undervalued? (11 marks)

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