Suppose Intel stock has a beta of 2.16, whereas Boeing stock has a beta of 0.69. If the risk-free interest rate is 4% and the expected return of the market portfolio is 10%, what is the expected return of a portfolio that consists of 60% Intel stock and 40% Boeing stock, according to the CAPM?
Portfolio beta =
Expected return of portfolio =
The Capital Asset Pricing Model determines the required return on a stock (or portfolio) by correlating the risk of the investment to that of the market. Specifically, it ...
This solution discusses the Capital Asset Pricing Model and the computation of a portfolio's beta and expected return.