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Consider a portfolio consisting of the following three stocks Portfolio Weight Volatilty Correlation and Market Portfolio HEC Corp 025 12% 04 Green Midget 035 25% 06 Alive

Consider a portfolio consisting of the following three stocks:

  Portfolio Weight Volatilty Correlation and Market Portfolio
HEC Corp

0.25

12% 0.4
Green Midget 0.35 25% 0.6
Alive an Well .40 13% 0.5
       

The volatility of the market portfolio is 10% and it has an expected return of 8%. The risk-free rate is 3%

. a. Compute the beta and expected return of each stock

. b. Using your answer from part a, calculate the expected return of the portfolio.

c. What is the beta of the portfolio?

d. Using your answer from part c, calculate the expected return of the portfolio and verify that it matches your answer to part b.

 

Apr 11 2020 Read more Less More

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