Question

Quantitative Problem: You are holding a portfolio with the following investments and betas: Stock Dollar investment Beta A $250,000 1.30 B 150,000 1.60 с 500,000 0.75 D 100,000 -0.35 Total investment $1,000,000 The market's required return is 11% and the risk-free rate is 4%. What is the portfolio's required return? Do not round intermediate calculations. Round your answer to three decimal places. % Check My Work

Answer 1

ļ ginen: Stock Investment Bela A $250,000 1.3 B 150,000 00,000 1.6 C D 100, ono 0.75 -0.35 $ 1,00d, ooo Masket's Required Return = 11% (Rm) Riske free rake = 4% (R) Portfolio's Required Return » ?? (Rp) Solis wafa + WB BB t We Be t Wo Bo 250,000 x1,3 + 150,000 x 1.6 + 500,000 x0.75 + 1,000,000 1,000,000 1,000,0 100 000 1,000,000 PP で x -0.35 0.905 using CAPM I capital Asset Pricing model) og + (Rm - Rf) Bp =4+ 111-4) X0.905 10.3357 Ans. CS Scanned with CamScanner