beta and security market line) You own a portiono consisting of the following stocks. The risk-free rate is o percent. Also, the expected return on the market portiollo is to percent. Calculate the expected return of your portfolio. (Hint: The expected return of a portfolio equals the weighted average of the individual stock's expected return, where the weights are the percentage invested in each stock.) Calculate the portfolio beta. Given the preceding information, plot the security market line on paper. Plot the stocks from your portfolio on your graph. . From your plot in part c, which stocks appear to be your winners and which ones appear to be losers? Why should you consider your conclusions in part d to be less than certain? The expected return of your portfolio is%. (Round to two decimal places.) Data table Stock 1 2 C Percentage of Portfolio 30% 35% 5% 15% 15% Beta 1.05 0.80 3 4 5 (Click on the icon in order to copy its contents into a spreadsheet.) 1.25 0.62 1.62 Expected Return 19% 13% 22% 11% 26% X

beta and security market line) You own a portiono consisting of the following stocks. The risk-free rate is o percent. Also, the expected return on the market portiollo is to percent. Calculate the expected return of your portfolio. (Hint: The expected return of a portfolio equals the weighted average of the individual stock's expected return, where the weights are the percentage invested in each stock.) Calculate the portfolio beta. Given the preceding information, plot the security market line on paper. Plot the stocks from your portfolio on your graph. . From your plot in part c, which stocks appear to be your winners and which ones appear to be losers? Why should you consider your conclusions in part d to be less than certain? The expected return of your portfolio is%. (Round to two decimal places.) Data table Stock 1 2 C Percentage of Portfolio 30% 35% 5% 15% 15% Beta 1.05 0.80 3 4 5 (Click on the icon in order to copy its contents into a spreadsheet.) 1.25 0.62 1.62 Expected Return 19% 13% 22% 11% 26% X

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

(Portfolio beta and security market line) You own a portfolio consisting of the following stocks: The risk-free rate is 8 percent. Also, the expected return on the market portfolio is 18 percent.
a. Calculate the expected return of your portfolio. (Hint: The expected return of a portfolio equals the weighted average of the individual stock's expected return, where the weights are the percentage invested in each stock.)
b. Calculate the portfolio beta.
c. Given the preceding information, plot the security market line on paper. Plot the stocks from your portfolio on your graph.
d. From your plot in part c, which stocks appear to be your winners and which ones appear to be losers?
e. Why should you consider your conclusions in part d to be less than certain?
a. The expected return of your portfolio is%. (Round to two decimal places.)
Data table
Stock
1
2
(...))
Percentage of Portfolio
30%
35%
5%
15%
15%
Beta
1.05
0.80
1.25
0.62
1.62
3
4
5
(Click on the icon in order to copy its contents into a spreadsheet.)
Print
Done
Expected Return
19%
13%
22%
11%
26%
X

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