Problem:

Use the following for these 2 questions:

Asset -Amount invested -Asset's Expected Return- Asset's Beta

A 2000 13% 1

B 3000 9% .5

C 5000 17% 1.5

Required:

Question 1: Based on the allocation of dollars among the 3 assets and their expected returns, what is your portfolio's expected return?

Question 2: Based on the allocation of dollars among the 3 assets and their betas, what is your potfolio's beta (NOTE: Portfolio beta is the weighted average of the asset's betas)? Please present complete computation and also provide full description.