The quoted rate of the short-term government security is 5% and a 2% premium is added to rate to reflect the market return. What is the required rate of return of the portfolio? (In percentage, put percentage sign) Blue Co. has an investment fund consist of three stocks as follows: STOCK INVESTMENT BETA ABC 500,000 1 DEF 1,250,000 0.8 XYZ 750,000 1.5

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Q: quiz 8-16

A: Step 1: The CAPM formula is:Expected Return = Risk-free rate + Beta * (Market return - Risk-free…

Q: What is the beta of the portfolio held by Blue Co.?

A: Average beta = 1 (Always)

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Q: The quoted rate of a short-term government security is 2%. A premium of 3% is added to the risk-free…

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Q: quiz 8-17

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Q: quiz 8-16

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Q: Give detailed solution

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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.