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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 Preview

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 ...

Solution Summary

This solution discusses the Capital Asset Pricing Model and the computation of a portfolio's beta and expected return.

$2.19