Question: Would I possible to get some help with this problem. Thanks. (Portfolio beta and security marketline) You own a portfolio consisting of the followingstocks: Therisk-free

Would I possible to get some help with this problem. Thanks.

(Portfolio beta and security marketline)

You own a portfolio consisting of the followingstocks: Therisk-free rate is 8 percent. Also, the expected return on the market portfolio is 12 percent.

a.Calculate the expected return of your portfolio. (Hint: The expected return of a portfolio equals the weighted average of the individualstock's expectedreturn, where the weights are the percentage invested in eachstock.)

b.Calculate the portfolio beta.

c.Given the precedinginformation, plot the security market line on paper.

Plot the stocks from your portfolio on your graph.

d.From your plot in part c, which stocks appear to be your winners and

which ones appear to belosers?

e.Why should you consider your conclusions in part d to be less than

certain?

Stock Percentage of Portfolio Beta Expected Return

1 10% 1.00 17%

2 20% 0.90 15%

3 5% 1.15 23%

4 15% 0.62 9%

5. 50% 1.65 26%

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!