Homework Answers
| 1] | Expected risk premium = Beta*Market risk premium | |
| 2] | For GOOG, 10.48 = 1.42*Market risk premium | |
| Market risk premium = 10.48/1.42 = | 7.38 | |
| 3] | For MSI, | |
| 6.46 = Beta*7.38 | ||
| Beta of MSI = 6.46/7.38 = | 0.88 | |
| 4] | Beta of portfolio = 1.42*68%+0.88*32% = | 1.25 |
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