You invest in a portfolio of 5 stocks with an equal investment in each one. The betas of the 5 stocks are as follows: 0.8, -1.3, 0.95, %3D 1.2, and 1.4. The risk-free return is 3% and the market return is 7%. a. Compute the beta of the portfolio. b. Compute the required return of the portfolio.

How do you find the market risk premium and market expected return given the expected return of stock, beta, and risk free rate? Example: The expected return of a stock with a beta of 1.2 is 16.2%. Calculate the market risk premium and the market expected return, given a risk-free rate of 3%.

You have a portfolio that is invested 24 percent in Stock A, 38 percent in Stock B, and 38 percent in Stock C. The betas of the stocks are .69, 1.24, and 1.53, respectively. What is the beta of the portfolio

The risk-free rate is 5.6%, the market risk premium is 8.5%, and the stock’s beta is 2.27.  What is the required rate of return on the stock, E(Ri)? Use the CAPM equation.

b) Suppose that you observe the following information in Table 2 for stocks A and B: Table 2 Expected Return (%) 11% Stock Beta A 0.8 В 14% 1.5 The risk-free rate of return is 6% and the expected rate of return on the market index is 12%. Using the Single-Index Model, calculate the alpha of both stocks. Show your calculations. Explain what the alpha of the single-factor model represents and interpret your results.

Problem 1: You invest in a portfolio of 5 stocks with an equal investment in each one. The betas of the 5 stocks are as follows: .75, -1.2, .90, 1.3, 1.5. The risk free return is 4% and the market return is 9%. A. Compute the beta of the portfolio B. Compute the required return of the portfolio

After learning the course, you divide your portfolio into three equal parts (i.e., equal market value weights), with one part in Treasury bills, one part in a market index, and one part in a mutual fund with beta of 0.72. What is the beta of your overall portfolio? 고

​(Portfolio beta and​ CAPM)  You are putting together a portfolio made up of four different stocks. ​ However, you are considering two possible​ weightings:   LOADING... .   a.  What is the beta on each​ portfolio? b.  Which portfolio is​ riskier? c.  If the​ risk-free rate of interest were 5 percent and the market risk premium were 6 percent​, what rate of return would you expect to earn from each of the​ portfolios?       Portfolio Weightings Asset Beta First Portfolio Second Portfolio A 2.20   12​% 38​% B 0.95   12​% 38​% C 0.60   38​% 12​% D −1.80   38​% 12​%

*Stock A has a beta of 1.3 and an expected return of 10.2. Stock B has a beta of 0.8 and an expected return of 8.7. If these stocks are priced correctly according to the CAPM, what is the risk-free rate? Give your answer in percentage to the nearest basis point.

Consider the following two scenarios for the economy and the expected returns in each scenario for the market portfolio, and aggressive stock A, and a defensive stock D. A. Find the beta of each stock B. If each scenario is equally likely, find the expected rate of return on the market portfolio and on each stock. C. If the T-bill rate is 4%, what does the CAPM say about the fair expected rate of return on the two stocks? D. Which stock seems to be a better buy on the basis of your answers to (a) through (c).