Compute the expected return and risk of a portfolio, Managerial Accounting

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Compute the Expected Return and Risk of a Portfolio?

The subsequent data are presented to you as a portfolio manager

Security	Expected Return	Beta	Standard Deviation
A	.30	2.0	.50
B	.25	1.5	.40
C	.20	1.0	.30
D	.18	0.8	.25
E	.15	0.5	.20

a. Draw out a security market line. In terms of the security market line, define which of the securities listed above are undervalued and with reason.

b. Supposing that a portfolio is constructed by using equal proportions of the five stocks listed above, compute the expected return and risk of such type of a portfolio.

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