Question

Portfolio return and beta Personal Finance Problem Jamie Peters invested $114,000 to set up the following portfolio one year ago Calculate the porta o beta on the basis of the original cost foures b. Calculate the percentage retum of each asset in the portfolio for the year c. Calculate the percentage retum of the portfolio on the basis of original cos, using income and gains during the year. d. At the time Jamie made his investments, investors were estimating that the market reum for the coming year would be 9% The estimate of the risk-free rate of retum averaged 5% for the coming year. Calculate an expected rate of return for each stock on the basis of ts beta and the expectations of market and risk free returns e. On the basis of the actual results, each stock in the portfolio performed differently relative to those CAPM-generated expectations of performance. What factors could explain these differences? The portfolio bela on the basis of the original cost figures is (Round to two decimal places)

Answer 1

Answer (a):

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Answer (b):

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Answer (c):

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Answer (d):

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