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Question: You are considering putting together a portfolio that would consist of 25% OPM stock, 30% PMO stock, and 45% MPO stock. The betas of each of the stocks are listed below:

Stock Beta

OPM 0.8

PMO 1.1

MPO 1.9

The market risk premium is 6.5% (the market risk premium is the difference between the return on the market and the risk free rate of return). The expected return on the market is 10%. According to the capital asset pricing model (CAPM), what is the expected return on your portfolio?

You will need to first calculate the beta of your portfolio.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92798567

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