Question: Please show all calculations to the entire problem for a good review. Answers are posted below but I need the full solutions. Thank you. Answers:

Please show all calculations to the entire problem for a good review. Answers are posted below but I need the full solutions. Thank you.

Please show all calculations to the entire problem for a good review.

Answers:

Portfolio Beta: 0.7785

Variance of error term (Firm Specific Risk): 17.805

Market Risk: 136.36

Total Risk Variance: 154.165

Total Risk Standard Deviation: 12.42%

Estimating Portfolio Variance with the Market Model Using the information in the table below, estimate the market risk, firm specific risk, and total risk of the portfolio of securities A, B, and C. The standard deviation of the market index portfolio is estimated as 15 percent. Show all your calculations. Security Beta Proportion Std. Deviation 0.52 0.78 1.19 40% 35% 25% of Error Term 8% 7% 5%

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