# Capital-asset-pricing model

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 12,000 1.4

Stock D 13,000 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?

https://brainmass.com/business/capital-asset-pricing-model/capital-asset-pricing-model-67149

#### Solution Preview

Amount Beta Proportion Product

$10,000 0.7 0.2 0.14

$15,000 1.2 0.3 0.36

$12,000 ...

#### Solution Summary

This discusses the capital-asset-pricing model and calcualtion of cost of equity

$2.19