You are considering creating a diversified portfolio consisting of the following 5 shares.

Share	A	B	C	D	E
Beta	1.33	0.70	1.50	0.66	1.20

 

1. If currently the risk-free rate equals 5% and the return on the market portfolio is 11%, calculate the return of each share according to Capital Asset Pricing Model (CAPM).
2. If you want to invest $1,500 in Share A, $3,000 in Share B, $6,000 in Share C, $1,500 in Share D and $3,000 in Share E, Calculate the weights of each share in the portfolio.
3. Calculate the return of the portfolio. 
4. Calculate the portfolio beta. 

Answer rating: 100% (QA)

According to the Capital Asset Pricing Model CAPM the expected return of a stock can be calculated u... View the full answer