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You hold a portfolio of three stocks with the following investments and individual betas.

Stock A $15,000; beta of 1.75

Stock B $40,000; beta of 0.90

Stock C $20,000; beta of 1.40

a) What is the portfolio beta? Show all work.

b) If the current risk-free rate of return is 3% and the return on an average risk security, r(m), is 7%, what is the required rate of return on the portfolio? Show all work.

Financial Management, Finance

  • Category:- Financial Management
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