2. Consider a portfolio comprised of three securities in the following proportions and with the indicated security beta. Security Amount Invested Beta Expected return $1.5 million 1.3 12.5% $1.0 million -0.1 896 $2.0 million 0.6 9.896 a. What is the portfolio's beta? b. What is the portfolio's expected return?
2. Consider a portfolio comprised of three securities in the following proportions and with the indicated security beta. Security Amount Invested Beta Expected return $1.5 million 1.3 12.5% $1.0 million -0.1 896 $2.0 million 0.6 9.896 a. What is the portfolio's beta? b. What is the portfolio's expected return?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Consider a portfolio comprised of three securities in the following proportions and with the indicated security beta.
a.) What is the portfolios beta?
b.) Wht is the portfolios expected return?
Transcribed Image Text:2. Consider a portfolio comprised of three securities in the following proportions and with the indicated security beta.
Security
Amount Invested
Beta
Expected return
A
$1.5 million
1.3
12.5%
B
$1.0 million
-0.1
8%6
$2.0 million
0.6
9.896
a. What is the portfolio's beta?
b. What is the portfolio's expected return?
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