What is the expected return of a portfolio with two stocks that has 450 shares of stock A, which has a price of $32.20 per share and an expected return of10.36%, and $51,900.00 of stock B, which has a beta of 1.18? The market has an expected return of 14.70 %, the inflation rate is 1.60 %, and the risk-free rate is2.10%.15.53% (plus or minus 4 bps)13.88% (plus or minus 4 bps)17.46% (plus or minus 4 bps)15.99% (plus or minus 4 bps)None of the above is within 4 bps of the correct answer

Step 1: Calculate the Total Value of Each StockFor Stock A:• Number of shares = 450• Price per share…

Answered: What is the expected return of a…

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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