Assume you are considering adding a third stock (Stock C) to your current portfolio. Stock A has a beta of 1.5. Stock B
Posted: Tue Apr 26, 2022 10:49 am
Assume you are considering adding a third stock (Stock C) to
your current portfolio. Stock A has a beta of 1.5. Stock B has a
beta of .8. Information needed to calculate the beta for the third
stock you are adding (Stock C) is below. You will make stock C 20%
of your overall portfolio; the remainder is evenly split between
stocks A and B. Expected return on the market portfolio: 12%
T-bills: 3% Expected rate of return on Stock C: 21% If the expected
return for A is .075 and for B is .11, what is the expected return
for the portfolio above?
your current portfolio. Stock A has a beta of 1.5. Stock B has a
beta of .8. Information needed to calculate the beta for the third
stock you are adding (Stock C) is below. You will make stock C 20%
of your overall portfolio; the remainder is evenly split between
stocks A and B. Expected return on the market portfolio: 12%
T-bills: 3% Expected rate of return on Stock C: 21% If the expected
return for A is .075 and for B is .11, what is the expected return
for the portfolio above?