Chapter 12, Problem 7QAP

a

Summary Introduction

Adequate information:

Beta of factor 1 $\left({\text{β}}_{\text{1}}\right)$ = 0.84

Beta of factor 2 $\left({\text{β}}_{\text{2}}\right)$ = 1.69

Expected return of the stocks $\left({\text{ER}}_{\text{S}}\right)$ = 11%

To compute: Return on portfolio

Introduction: Return on portfolio refers to the sum total of returns earned on individual securities such as stocks, bonds, etc.

b

Summary Introduction

Adequate information:

Beta of factor 1 $\left({\text{β}}_{\text{1}}\right)$ = 0.84

Beta of factor 2 $\left({\text{β}}_{\text{2}}\right)$ = 1.69

Expected return of the stocks $\left({\text{ER}}_{\text{S}}\right)$ = 11%

To compute: Return on portfolio

Introduction: Return on portfolio refers to the sum total of returns earned on individual securities such as stocks, bonds, etc.