Suppose you are the money manager of a P4.0 investment portfolio consists of stocks with the following investment and betas: Stock Beta S 1.5 T (0.50) A 1.25 R 0.75 If the market required return is 14% and the risk free rate is 6%, a) What is the portfolio beta? b) What is the portfolio required rate of return?

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter2: Risk And Return: Part I
Section: Chapter Questions
Problem 10P
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Suppose you are the money manager of a P4.0 investment portfolio consists of stocks with the following investment and betas:

Stock Beta
S 1.5
T (0.50)
A 1.25
R 0.75

If the market required return is 14% and the risk free rate is 6%,
a) What is the portfolio beta?
b) What is the portfolio required rate of return?

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