Capital-Asset-Pricing : Based on the capital-asset-pricing model, what is the expected return on the above portfolio?
Suppose you have invested $50,000 in the following four stocks:
Security Amount Invested Beta
Stock A $10,000 0.7
Stock B 15,000 1.2
Stock C 12000 1.4
Stock D 13000 1.9
The risk-free rate is 5 percent and the expected return on the market portfolio is 18 percent.
Based on the capital-asset-pricing model, what is the expected return on the above portfolio?
Capital-asset-pricing and expected return are investigated. The solution is detailed and well presented. The response was given a rating of "5/5" by the student who originally posted the question.
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