Mr. Ahsan is holding a $100 million portfolio that consists of the following six stocks: Stock Amount invested Beta A $10 million 1.5 B $5 million 1.2 C $18 million 0.75 D $13 million 1.3 E $24 million 0.8 F $30 million 1.4 The portfolio has a required return of 13 percent, and the market risk premium is 5.5 percent. Calculate the required return on Stock A, B, C, D, E, and F

EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter8: Risk And Rates Of Return
Section: Chapter Questions
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Mr. Ahsan is holding a $100 million portfolio that consists of the following six stocks:

Stock Amount invested Beta
A $10 million 1.5
B $5 million 1.2
C $18 million 0.75
D $13 million 1.3
E $24 million 0.8
F $30 million 1.4

The portfolio has a required return of 13 percent, and the market risk premium is 5.5 percent.
Calculate the required return on Stock A, B, C, D, E, and F

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