Expected return of a portfolio using beta. The beta of four stocks—P, Q, R, and S—are 0.49, 0.81, 1.19, and 1.53, respectively and the beta of portfolio 1 is 1.01, the beta of portfolio 2 is 0.86, and the beta of portfolio 3 is 1.15. What are the expected returns of each of the four individual assets and the three portfolios if the current SML is plotted with an intercept of 4.5% (risk-free rate) and a market premium of 12.0% (slope of the line)? What is the expected return of stock P? (Round to two decimal places.) What is the expected return of stock Q? (Round to two decimal places.) What is the expected return of stock R? (Round to two decimal places.) What is the expected return of stock S? (Round to two decimal places.) What is the expected return of portfolio 1? (Round to two decimal places.) What is the expected return of portfolio 2? (Round to two decimal places.) What is the expected return of portfolio 3? (Round to two decimal places.)
Expected return of a portfolio using beta. The beta of four stocks—P, Q, R, and S—are 0.49, 0.81, 1.19, and 1.53, respectively and the beta of portfolio 1 is 1.01, the beta of portfolio 2 is 0.86, and the beta of portfolio 3 is 1.15. What are the expected returns of each of the four individual assets and the three portfolios if the current SML is plotted with an intercept of 4.5% (risk-free rate) and a market premium of 12.0% (slope of the line)? What is the expected return of stock P? (Round to two decimal places.) What is the expected return of stock Q? (Round to two decimal places.) What is the expected return of stock R? (Round to two decimal places.) What is the expected return of stock S? (Round to two decimal places.) What is the expected return of portfolio 1? (Round to two decimal places.) What is the expected return of portfolio 2? (Round to two decimal places.) What is the expected return of portfolio 3? (Round to two decimal places.)
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 25P
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Question
Expected return of a portfolio using
beta.
The beta of four
stocks—P,
Q, R, and
S—are
0.49,
0.81,
1.19,
and
1.53,
respectively and the beta of portfolio 1 is
1.01,
the beta of portfolio 2 is
0.86,
and the beta of portfolio 3 is
1.15.
What are the expected returns of each of the four individual assets and the three portfolios if the current SML is plotted with an intercept of
4.5%
(risk-free rate) and a market premium of
12.0%
(slope of the line)?What is the expected return of stock P?
What is the expected return of stock Q?
What is the expected return of stock R?
What is the expected return of stock S?
What is the expected return of portfolio 1?
What is the expected return of portfolio 2?
What is the expected return of portfolio 3?
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