The average return on the Market is 12% while the market risk premium is 7%.What is the require rate of return of the portfolio? (In percentage) Blue Co. has a collection of shares that is publicly trade. The value of eachsecurity and its stock beta are as follows:StockInvestment BetaСЕВ3,000,0002SMC3,000,0001.2SCC800,0000.5MTB1,200,0001

Market return = 12% Market premium = 7% Risk free rate = 12%-7% = 5%

Answered: The average return on the Market is 12%…

The average return on the Market is 12% while the market risk premium is 7%. What is the require rate of return of the portfolio? (In percentage)

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

The average return on the Market is 12% while the market risk premium is 7%.

What is the require rate of return of the portfolio? (In percentage)

Blue Co. has a collection of shares that is publicly trade. The value of each
security and its stock beta are as follows:
Stock
Investment Beta
СЕВ
3,000,000
2
SMC
3,000,000
1.2
SCC
800,000
0.5
MTB
1,200,000
1

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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see attached image.
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