You have the following information: Beta of Stock A = 1.35 Beta of Stock B =...

You have the following information:

Beta of Stock A = 1.35 Beta of Stock B = 0.95 Beta of Stock C = 1.6

Return Stock A = 12% Return Stock B = 9% Return Stock C = 18%

Your portfolio has $3,000 invested in A, $4,500 in B, and $7,500 in C.

The standard deviation of the portfolio is 2.5%.

The T-Bill rate is 3.1% and return on the S&P 500 is 8.8%.

a. Calculate the expected return on the portfolio. Answer in percent form to two decimal places.

b. Calculate the beta of the portfolio. Answer to three decimal places.

c. Calculate the required rate of return on the portfolio using the CAPM. . Answer in percent form to four decimal places.

d. Estimate alpha. . Answer in percent form to four decimal places.

Expert Solution

jeff jeffy answered 2 years ago

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