Problem 3: Calculating a portfolio's beta and CAPM-based expected rate of return Ashley is curious to...

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Answer 1

Answer #1

Please provide rating.............

Expected rerurn on stock = Risk free rate + Market risk premium * beta


	i	ii	iii	iv	v=iii+(iv)*iii	vi=i*v
Stock	Market value	Beta	Risk free rate	Market risk premium	Expected return	Expected return * value
A	35000	1.6	3%	8%	15.80%	5530
B	40000	1.2	3%	8%	12.60%	5040
C	45000	1	3%	8%	11.00%	4950
D	50000	-0.8	3%	8%	-3.40%	-1700
E	80000	0.8	3%	8%	9.40%	7520
	250000					21340

Expected return on portfolio = 21340/250000						8.54%

Answer 2

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