Problem 8-10

What is the required return on an investment with a beta of 1.3 if the risk-free rate is 1.2 percent and the return on the market is 8.4 percent? Round your answer to two decimal places.

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If the expected return on the investment is 12.3 percent, what should you do?

Since the expected return -Select-is greateris lessItem 2 than the required return, the individual -Select-shouldshould notItem 3 make the investment.

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.

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