Question: Mr. Aly has made following combination of investment in a stock market with the assigned beta value. Firms Rate of investment Beta A 0.500 .80

Mr. Aly has made following combination of investment in a stock market with the assigned beta value.

Firms         Rate of investment        Beta

A                            0.500                 .80

B                            0.101                  .2

C                            0.250                  .3

D                            0.151                  .5


Required

a. Calculate portfolio beta value for Mr. Aly

b. Assume that the risk-free rate is 7% and that the market risk premium is 8%. What rate of return Mr. Aly expecting from his portfolio investment?

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