An investor currently holds the following portfolio: Stock A $12,000 Beta = 1.4S

Question

An investor currently holds the following portfolio: Stock A $12,000 Beta = 1.4Stock B $18,000 Beta = 1.2Stock C $20,000 Beta = 1.6lf the risk-free rate of return is 3% and the market risk premium is 7%, then the required return on the portfolio is: 14.032% 12.8% 8.632% 12.856% Williams Company stock has a beta of 1.3 and a required return of 13.1%, while Jones Inc. stock has a beta of .8 and a required return of 9.6%. The expected return on the market portfolio according to the CAPM is: 12% 11% 13% 10%

Explanation / Answer

1) d) 12.856%

2) b) 11%

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