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%
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