Find the portfolios risk premium

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Reference no: EM131583251

You have three stocks – say, stock A, B, and C - with betas 1.2, 1.0, and 0.8 each. Suppose you invested last year as much as 0.5, 0.3, and 0.2 of your wealth in each stock, and earned 18% from the portfolio. Suppose also that the market return is 12%, and the risk free return is 4%. Answer the following questions.

(1) Find the portfolio’s beta.

(2) Find the portfolio’s risk premium.

(3) Find Treynor ratio and interpret it.

(4) Find Jensen’s alpha and interpret it.

Reference no: EM131583251

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