Jason Jackson is attempting to evaluate two possible portfolios consisting of the same five assets but held in different proportions. He is particularly interested in using beta to compare the risk of portfolios and, in this regard, has gathered the following data: a. Calculate the betas for portfolios A and B. b. If the risk-free rate is 2.9% and the market return is 6.3%, calculate the required return for each portfolio using the CAPM. a. The beta of portfolio A is (Round to three decimal places.) Data table (Click on the icon here in order to copy its contents of the data table below into a spreadsheet.) Portfolio Weights 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
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CH 5 Q9 practice 

Jason Jackson is attempting to evaluate two possible portfolios consisting of the same five assets but held in different proportions. He is particularly interested in using beta to compare the risk of the
portfolios and, in this regard, has gathered the following data:
a. Calculate the betas for portfolios A and B.
b. If the risk-free rate is 2.9% and the market return is 6.3%, calculate the required return for each portfolio using the CAPM.
a. The beta of portfolio A is
(Round to three decimal places.)
Data table
(Click on the icon here in order to copy its contents of the data table below into
a spreadsheet.)
Asset
1
2
3
4
5
Total
Asset Beta
1.33
0.69
1.26
1.14
0.88
Portfolio Weights
Portfolio A
16%
32%
8%
14%
30%
100%
Portfolio B
I
27%
5%
16%
27%
25%
100%
X
Transcribed Image Text:Jason Jackson is attempting to evaluate two possible portfolios consisting of the same five assets but held in different proportions. He is particularly interested in using beta to compare the risk of the portfolios and, in this regard, has gathered the following data: a. Calculate the betas for portfolios A and B. b. If the risk-free rate is 2.9% and the market return is 6.3%, calculate the required return for each portfolio using the CAPM. a. The beta of portfolio A is (Round to three decimal places.) Data table (Click on the icon here in order to copy its contents of the data table below into a spreadsheet.) Asset 1 2 3 4 5 Total Asset Beta 1.33 0.69 1.26 1.14 0.88 Portfolio Weights Portfolio A 16% 32% 8% 14% 30% 100% Portfolio B I 27% 5% 16% 27% 25% 100% X
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