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Calculate the beta of the portfolio

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Q1. In February 2017 the risk-free rate was 4.06 percent, the market risk premium was 8 percent, and the beta for Twitter stock was 1.37. What is the expected return that was consistent with the systematic risk associated with the returns on Twitter stock?

Q2. You have just invested in a portfolio of three stocks. The amount of money that you invested in each stock and its beta are summarized below.

Stock

Investment

Beta

A

$210,000

1.47

B

315,000

0.61

C

525,000

1.16

Calculate the beta of the portfolio and use the Capital Asset Pricing Model (CAPM) to compute the expected rate of return for the portfolio. Assume that the expected rate of return on the market is 16 percent and that the risk-free rate is 8 percent.

Reference no: EM132994041

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