The volatility of the market portfolio is 10% and it has an expected return of 8%. The

Question:

The volatility of the market portfolio is 10% and it has an expected return of 8%. The risk-free rate is 3%.

a. Compute the beta and expected return of each stock.

b. Using your answer from part a, calculate the expected return of the portfolio

c. What is the beta of the portfolio?

d. Using your answer from part c, calculate the expected return of the portfolio and verify that it matches your answer to part b.

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...