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Question: How much risk will the portfolio carry? Kraska will answer this question by explaining the capital asset pricing model in the most straightforward terms possible. He will illustrate how we use the CAPM to compute the expected rate of return on a stock. Use an expected market return of 12%, a risk-free rate of 5%, and the betas for Amazon.com (3.02), Coca-Cola (0.62), and Merck Pharmaceuticals (1.11) to compute the expected rate of return on these stocks. He will illustrate the concept of portfolio beta using the same three stocks. Compute the beta for a portfolio composed of $20,000 invested in Amazon.com, $50,000 in Coca-Cola, and $35,000 in Merck Pharmaceuticals. show all work

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92842946

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