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Assume you have a portfolio with the stocks and their information:

Stock. Total $ invested. Beta. Expected Return

DuPont. $25,000 0.99 10.12%

McDonald’s Corp. $50,000 0.72 8.16%

Ford. $60,000 1.24 12.2%

A) Calculate Beta of the Portfolio.

B) Calculate the Expected return for the portfolio using the CAPM and the beta value for the portfolio. Assume the market risk premium (Rm – Rrf) equals 6% and the Risk free rate (Rrf) equals the rate on a 2 year treasury 0.25%.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92326006

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