K 1.43 OT 10 Save Expected return of a portfolio using beta. The beta of four stocks-P, Q, R, and S-are 0.49, 0.91, 1.15, and 1.44, respectively and the beta of portfolio 1 is 1.00, the beta of portfolio 2 is 0.89, and the beta of portfolio 3 is 1.12. 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 5.0% (risk-free rate) and a market premium of 12.0% (slope of the line)? What is the expected return of stock P? 10.88% (Round to two decimal places.) What is the expected return of stock Q? % (Round to two decimal places.)
K 1.43 OT 10 Save Expected return of a portfolio using beta. The beta of four stocks-P, Q, R, and S-are 0.49, 0.91, 1.15, and 1.44, respectively and the beta of portfolio 1 is 1.00, the beta of portfolio 2 is 0.89, and the beta of portfolio 3 is 1.12. 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 5.0% (risk-free rate) and a market premium of 12.0% (slope of the line)? What is the expected return of stock P? 10.88% (Round to two decimal places.) What is the expected return of stock Q? % (Round to two decimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1.43 OT 10
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Expected return of a portfolio using beta. The beta of four stocks-P, Q, R, and S-are 0.49, 0.91, 1.15, and 1.44, respectively and the beta of portfolio 1 is 1.00, the beta of portfolio 2 is 0.89, and the
beta of portfolio 3 is 1.12. 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 5.0% (risk-free rate) and a market
premium of 12.0% (slope of the line)?
What is the expected return of stock P?
10.88% (Round to two decimal places.)
What is the expected return of stock Q?
% (Round to two decimal places.)
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