Determine the expected return of the entire portfolio that are listed above  Determine the beta of the entire portfolio listed above  Given the information provided above, you are required to determine whether the three banks are overpriced, fairly or overpaid based on the information provided. Assume the risk- free rate is 8% and that the expected return on the market portfolio is 12%

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 20P
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PERCENTAGE OF

PORTFOLIO

BETA

EXPECTED RETURN (%)

ABSA

40

1.00

12

FNB

25

0.75

11

CAPITEC

35

1.30

15

 

Required:

  • Determine the expected return of the entire portfolio that are listed above 
  • Determine the beta of the entire portfolio listed above 

Given the information provided above, you are required to determine whether the three banks are overpriced, fairly or overpaid based on the information provided. Assume the risk- free rate is 8% and that the expected return on the market portfolio is 12%.

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