Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 25P
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Question
A stock has an expected return of 10.2%, the risk-free rate 4.1% and the market risk premium is 7.2%. Calculate the beta of this stock.
State of economy |
Probability |
|
||
|
|
Stock A |
Stock B |
Stock C |
Boom |
0.35 |
0.24 |
0.36 |
0.55 |
Normal |
0.50 |
0.17 |
0.13 |
0.09 |
Bust |
0.15 |
0 |
0.28 |
0.45 |
c) Base on the table above, you invested 40% on Stock A and B and 20% on Stock C. Calculate the expected return on this portfolio.
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