Explore BrainMass

Explore BrainMass

    An investor is forming a portfolio

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    I need assistance in solving the following problem.

    An investor is forming a portfolio by investing $50,000 in stock A which has a beta of 1.50, and $25,000 in stock B which has a beta of 0.90. The return on the market is equal to 6 percent and Treasury bonds have a yield of 4 percent. What is the required rate of return on the investor's portfolio?

    a. 6.6%
    b. 6.8%
    c. 5.8%
    d. 7.0%
    e. None of the answers above is correct.

    © BrainMass Inc. brainmass.com June 3, 2020, 9:08 pm ad1c9bdddf
    https://brainmass.com/business/business-math/investor-forming-portfolio-167288

    Attachments

    Solution Preview

    Hi!

    An investor is forming a portfolio by investing $50,000 in stock A which has a beta of 1.50, and $25,000 in stock B which has a beta of 0.90. The return ...

    Solution Summary

    I show step-by-step calculations on how to arrive at the answer.

    $2.19

    ADVERTISEMENT