You hold a portfolio of three stocks with the following, Ask an Expert

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

Stock A $20,000; beta of 1.75

Stock B $40,000; beta of 0.90

Stock C $25,000; beta of 1.55

a) What is the portfolio beta? HINT: Get a weighted average of the three betas. Show all work.

b) If the current risk-free rate of return is 3.5% and the return on an average risk security, r(m), is 6%, what is the required rate of return on the portfolio? Use the portfolio beta found in part a. Show all work.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92855793

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