The following portfolio has an expected return of _ percent and a beta of __

ID: 2762601 • Letter: T

Question

The following portfolio has an expected return of ___ percent and a beta of ____.
Security: J Amount invested: $36000 Expected return: 16.2% Beta: 1.47
Security: K Amount invested: $24000 Expected return: 10.5% Beta: 1.38
Security: L Amount invested: $20000 Expected return: 11.8% Beta: 1.29
The following portfolio has an expected return of ___ percent and a beta of ____.
Security: J Amount invested: $36000 Expected return: 16.2% Beta: 1.47
Security: K Amount invested: $24000 Expected return: 10.5% Beta: 1.38
Security: L Amount invested: $20000 Expected return: 11.8% Beta: 1.29

Security: J Amount invested: $36000 Expected return: 16.2% Beta: 1.47
Security: K Amount invested: $24000 Expected return: 10.5% Beta: 1.38
Security: L Amount invested: $20000 Expected return: 11.8% Beta: 1.29

Explanation / Answer

Solution :

Total

Expected Return

16.20%

10.50%

11.80%

beta

1.47

1.38

1.29

Investment

36000

24000

20000

80000

Weight (amount invested/total investment)

0.45

0.30

0.25

1.00

Expected Return of portfolio

7.29%

3.15%

2.95%

13.39%

sum of (expected return of securityX Weight)

(7.29+3.15+2.95)

beta of portfolio

0.66

0.41

0.32

1.40

sum of (beta of security X Weight)

(.66+.41+.32)