Portfolio Betas & expected returns
stock R, 15% in stock S, and 40% in stock T. The betas for these stocks are
.84, 1.17, 1.11, and 1.36 respectively. What is the portfolio beta?
2. (Using CAPM) A stock has a beta of 1.05, the expected
return on the market is 11 % and the risk-free rate is 5.2 %. What must the
expected return on the stock be?
3. (Using CAPM) A stock has an expected return of 10.2%, the
risk-free rate is 4.5%, and the market risk premium is 8.5%. What must the beta
of this stock be?
4. (Using CAPM) A stock has an expected return of 13.5%, its
beta is 1.17 and the risk-free rate is 5.5%. What must the expected return on
the market be?
5. (Using CAPM) A stock has an expected return of 14%, its
beta is 1.45, and the expected return on the market is 11.5%. What must the
risk-free rate be?
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