You invested $90,000 in the following stocks: Stock Amount Beta ABC $14,400 0.78 DEF $20,700 1.18...
You invested $90,000 in the following stocks:
| Stock | Amount | Beta | ||
| ABC | $14,400 | 0.78 | ||
| DEF | $20,700 | 1.18 | ||
| GHI | $14,400 | 1.33 | ||
| JKL | $40,500 | 1.13 |
If the risk-free rate is 4.8 percent and the market risk premium is
7.8 percent, what is the expected return on your portfolio?
(Round intermediate calculations to 4 decimal places,
e.g. 0.3612 and the final answer to 2 decimal places, e.g.
12.36%.)
What is the expected return ( in percentage)?
Homework Answers
Portfolio beta=Respective beta*Respective weight
=(14400/90,000*0.78)+(20700/90,000*1.18)+(14400/90,000*1.33)+(40500/90,000*1.13)
=1.1175
Expected rate=risk free rate+Beta*market risk premium
=4.8+1.1175*7.8
=13.52%(Approx).
Add Answer to:
You invested $90,000 in the following stocks:
Stock
Amount
Beta
ABC
$14,400
0.78
DEF
$20,700
1.18...
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