Suppose Mark wants to invest of

$100 000 in a portfolio containing stock A and stock B.

His goal is to have a portfolio that has an expected return of 12.7 per cent. If stock A has

an expected return of 11.4 per cent and a beta of 1.25, and stock B has an expected return

8.68 per cent and a beta of 0.85, how much money will he invest in stock B? How would

you interpret the answer? What is the beta of his portfolio?

Answer rating: 100% (QA)

To determine how much money Mark should invest in stock B we can use the concept of the capital asse... View the full answer