Q 5. Mr. Gill has inherited the following portfolio: Share Share price No. of shares Beta ABCplc DEFplc GHlplc £1.50 20,000 0.80 £2.20 10,000 1.20 £1.90 20,000 1.10 a. What is the beta on this portfolio? b. If the risk-free rate of return is 6.5 per cent and the risk premium on shares over Treasury bills has been 5 per cent what is the expected return on this portfolio over the next year?

Q 5. Mr. Gill has inherited the following portfolio: Share Share price No. of shares Beta ABCplc DEFplc GHlplc £1.50 20,000 0.80 £2.20 10,000 1.20 £1.90 20,000 1.10 a. What is the beta on this portfolio? b. If the risk-free rate of return is 6.5 per cent and the risk premium on shares over Treasury bills has been 5 per cent what is the expected return on this portfolio over the next year?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 11P

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