You are considering investing in a portfolio of 3 shares, A, B and C. You plan to invest 45% of your funds in share A, 30% of your funds in share B and the remainder in share C. The expected return on shares A, B and C are shown in the following table along with the beta of each of the three different shares.

	Share A	Share B	Share C
Expected return	8%	9%	10%
Beta	1.0	1.20	1.30

a. What is the expected return on the portfolio? (3.25 marks)

b. What is the beta of the portfolio? (3 marks)

Answer rating: 100% (QA)

a The expected return on the portfolio is a weighted average of the expected returns on the individu... View the full answer