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Tom OBrien has a 2-stock portfolio with a total value of $100,000 $47.500 is invested in Stock A with a beta of 0.75 and the
Click here to read the eBook: The Relationship Between Risk and Rates of Return REQUIRED RATE OF RETURN Assume that the risk-
PORTFOLIO BETA An individual has $50,000 invested in a stock with a beta of 0.5 and another $30,000 invested in a stock with
.000 Calculate the required rate of return for Climax Inc., assuming that (1) investors expect a 4.0% rate of inflation in th
Click here to read the eBook: The Relationship Between Risk and Rates of Return REQUIRED RATE OF RETURN Stock R has a beta of
Stock Beta 1.40 Investment $150,000 $10,000 $140,000 $75,000 $375,000 0.80 1.00 1.20 Total What is the portfolios beta? Do n
Jim Angel holds a $200,000 portfolio consisting of the following stocks: Stock Beta Investment $50,000 $50,000 $50,000 $50,00
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Answer #1

1. Beta of Portfolio =Weight of Asset A*Beta of A +Weight of Asset B*Beta of B
=47500/100000*0.75+52500/100000*1.42 =1.10 (Option d is correct option)

2. Required rate of Return using CAPM = Risk free Rate+Beta*(Market Return -Risk Free Rate) =5%+1.7*(13%-5%) =18.60%

3. Beta of Portfolio =Weight of Asset A*Beta of A +Weight of Asset B*Beta of B
=50000/(50000+30000)*0.5+30000/(50000+30000)*1.4 =0.8375 or 0.84

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