sisting of the following stocks below:Beld ana security market line) Stanislas Korowski owns a portfolio con-x6-23.MytabPERCENTAGE OF PORTFOLIOSTOCK OR SECURITYBETAEXPECTED RETURN115%1.0511%2.25%0.757%20%1.1513%30%0.759%10%1.8018%The risk-free rate is 4 percent. Also, the expected return on the market portfolio is 12 percent.a. Calculate the expected return of the portfolio. (Hint: The expected returnof a portfolio equals the weighted average of the individual stocks' expectedreturns, where the weights are the percentage invested in each stock.)b. Calculate the portfolio beta.c. Given the foregoing information, plot the security market line on paper. Plotthe stocks from the portfolio on your graph.d. From the plot in part (c), which stocks appear to be winners and which onesappear to be losers?e. Why should Stanislas consider the conclusion in part (d) to be less than certain?aportfolio

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Stanislas Korowski owns a portfolio con- sisting of the following stocks below: Mytab PERCENTAGE OF PORTFOLIO STOCK OR SECURITY ВЕТА EXPECTED RETURN 1 15% 1.05 11% 2. 25% 0.75 7% 3 20% 1.15 13% 4 30% 0.75 9% 10% 1.80 18% The risk-free rate is 4 percent. Also, the expected return on the market portfolio is 12 percent. a. Calculate the expected return of the portfolio. (Hint: The expected return tíolio oguale tho weighted average of the individual stocks' expected

Stanislas Korowski owns a portfolio con- sisting of the following stocks below: Mytab PERCENTAGE OF PORTFOLIO STOCK OR SECURITY ВЕТА EXPECTED RETURN 1 15% 1.05 11% 2. 25% 0.75 7% 3 20% 1.15 13% 4 30% 0.75 9% 10% 1.80 18% The risk-free rate is 4 percent. Also, the expected return on the market portfolio is 12 percent. a. Calculate the expected return of the portfolio. (Hint: The expected return tíolio oguale tho weighted average of the individual stocks' expected

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 25P

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