You are building a portfolio made up of four different stocks, however you are considering two possible
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You are building a portfolio made up of four different stocks, however you are considering two possible weightings
portfolio weights | |||
Asset | Beta | First Portfolio | Second Portfolio |
A | 2.20 | 8% | 42% |
B | 1.05 | 8% | 42% |
C | 0,60 | 42% | 8% |
D | -1.70 | 42% | 8% |
1. What is the beta of each portfolio?
2. Which portfolio is riskier?
3. If the risk-free interest rate were 5% and the market risk premium were 6%, what is the rate of return on the first portfolio?
If the risk-free interest rate were 5% and the market risk premium were 6%, what is the rate of return on the second portfolio?
Related Book For
Financial Management Principles and Applications
ISBN: 978-0133423822
12th edition
Authors: Sheridan Titman, Arthur Keown, John Martin
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