A portfolio consists of 4 stocks with the followingcharacteristics:$Invested$30,000$20,000$17,0001.15$13,0001.08Right now the risk free rate of return is 4.5% and theexpected return of the market is 11.2%. According tothe capital asset pricing model, what is the expectedreturn of the portfolio?Stock1234Beta of the Stock1.361.28

We need to use CAPM model to calculate expected rate of return.. Expected rate of return =Risk free…

A portfolio consists of 4 stocks with the following characteristics: Stock 1 234 $ Invested $30,000 $20,000 $17,000 Beta of the Stock 1.36 1.28 1.15 $13,000 1.08 Right now the risk free rate of return is 4.5% and the

A portfolio consists of 4 stocks with the following characteristics: Stock 1 234 $ Invested $30,000 $20,000 $17,000 Beta of the Stock 1.36 1.28 1.15 $13,000 1.08 Right now the risk free rate of return is 4.5% and the

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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Question

A portfolio consists of 4 stocks with the following
characteristics:
$Invested
$30,000
$20,000
$17,000
1.15
$13,000
1.08
Right now the risk free rate of return is 4.5% and the
expected return of the market is 11.2%. According to
the capital asset pricing model, what is the expected
return of the portfolio?
Stock
1
234
Beta of the Stock
1.36
1.28

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