If Intel stock has a beta of 2.16 and Boeing a beta of .69, what is expected return?
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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 =
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Solution Summary
This solution discusses the Capital Asset Pricing Model and the computation of a portfolio's beta and expected return.
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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 ...
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