Expected return of a portfolio using beta. The beta of four stocks—​P, ​Q, R, and S—are 0.49​, 0.81​, 1.19​, and 1.53​, respectively and the beta of portfolio 1 is 1.01​, the beta of portfolio 2 is 0.86​, and the beta of portfolio 3 is 1.15. What are the expected returns of each of the four individual assets and the three portfolios if the current SML is plotted with an intercept of 4.5​% ​(risk-free rate) and a market premium of 12.0​% ​(slope of the​ line)? What is the expected return of stock​ P?     ​(Round to two decimal​ places.) What is the expected return of stock​ Q?     ​(Round to two decimal​ places.) What is the expected return of stock​ R?     ​(Round to two decimal​ places.) What is the expected return of stock​ S?     ​(Round to two decimal​ places.) What is the expected return of portfolio​ 1?     ​(Round to two decimal​ places.) What is the expected return of portfolio​ 2?     ​(Round to two decimal​ places.) What is the expected return of portfolio​ 3?     ​(Round to two decimal​ places.)

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Portfolio Management

Portfolio management is the process by which an investor decides that how the person will invest in a variety of assets in order to get a desired return in the future. A portfolio means a pool of assets that includes securities, bonds, and other investment instruments which helps in risk minimization of the money that has been invested. In other words, it can be said that a portfolio means a combination of assets in which an investor decides to invest their money in order to get a lump sum return in the future or even a series of cash flow that the person is expecting at the end of their job life.