Problem 8-08

Two stocks, A and B, have beta coefficients of 0.5 and 0.6, respectively. If the expected return on the market is 8 percent and the risk-free rate is 4 percent, what is the risk premium associated with each stock? Round your answers to two decimal places.

The risk premium for stock A: %

The risk premium for stock B: %

Consider a $36,000 portfolio consisting of three stocks. Their values and expected returns are as follows:

Stock	Investment			Expected Return
A		$ 6,000		9	%
B		10,000		4
C		20,000		24

What is the weighted-average expected return on the portfolio? Round your answer to one decimal place.

%