(6 pts) You have an $80,000 portfolio of large-cap
stocks. They consists of the following:
Portfolio of large cap stocks:
Stock beta Dollar
amount
Wal-mart 0.70 $20,000
IBM 1.15 $10,000
PG 0.80 $50,000
Total $80,000
What is the beta of your
portfolio?
Portfolio Beta = _____________
If the current money market rate is 1.2% and the market risk
premium is 7.5%, what is the required rate of return for your large
cap stock portfolio?
Required Rate of Return =
_____________
(2 pts) An option contract represents an
option on ___________...