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Suppose Autodesk stock has a beta of 2.10 whereas Costco stock has a beta of 0.72 If the risk-free interest rate is 3 % and the expected return of the market portfolio is 13.0 % what is the expected return of a portfolio that consists of 70 % Autodesk stock and 30 % Costco stock, according to the CAPM? shares of Colgate-Palmolive. The current share prices and expected returns ofApple, Cisco, and Colgate-Palmolive are, respectively, $ 506 $ 25 $ 100 and 12 % 10 % 8 % a. What are the portfolio weights of the three stocks in your portfolio? b. What is the expected return of your portfolio? c. Suppose the price of Apple stock goes up by $ 22 Cisco rises by $ 7 and Colgate-Palmolive falls by $ 11 What are the new portfolio weights? d. Assuming the stocks' expected returns remain the same, what is the expected return of the portfolio at the new prices?

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Financial Management, Finance

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