You are planning investing in a portfolio of common stocks of four publicly traded companies with betas as follows:
ABC: 0.7
DEF: 0.9
GHI: 1.3
JKL: 1.9
If the risk-free rate is 4% and the market rate is 10 percent, what is your expected rate of return in:
ABC?
DEF?
GHI?
JKL?
e. If your portfolio is 20% in ABC, 30% in DEF, 30% in GHI, and 20 percent in JKL, determine your portfolio (weighted average) expected rate of return?