Question: Please provide me with working based on formula Question 3 a) Using the formula given below, calculate the beta and the required returns of the

 Please provide me with working based on formula Question 3 a)

Please provide me with working based on formula

Question 3 a) Using the formula given below, calculate the beta and the required returns of the respective portfolios (using Capital Asset Pricing Model (CAPM). (Calculations must be done manually. Show all workings) Please assume the following to answer this question: A beta of 1.45 and 0.76 for Stock A and Stock B respectively A return on a market portfolio (Rm) of 9% and a risk-free rate (Rf) of 2% . Portfolio: P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 P11 Weight for 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Stock A Weight for Stock B 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Beta BP1 BP2 BPA Bps BP6 BP7 BP8 Bpg BP10 Bpu RP2 Rp3 Rp4 Rp5 RP6 Rp7 Rp8 Rpg Rp1o Rou Required Return Rp [22 marks] Formula: Beta of a Portfolio, Bp Bp = EW x B Required Return R = Rf + Bp (Rm - Rf) b) Which portfolio(s) is/are good to create? Provide a reason. [3 marks) c) Which portfolio(s) is/are overvalued and undervalued? [10 marks)

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