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    Stocks, Portfolios, and Expected Return

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    I have 2 finance problems which I need help with. I need step-by-step explanations please. Thanks.

    1. A stock has a beta of 1.24. The expected return on the market is 11.5% and the risk free rate is 3.4%. What is the expected rate of return on the stock?

    2. You own a portfolio that has $3,400 invested in Stock A and $4100 invested in stock B. If the expected returns on these stocks are 9.5% and 15.2% respectively, what is the expected return on the portfolio?

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    Solution Summary

    Solution consists of an Excel spreadsheet calculating the required rate of return and a portfolio's expected return.

    $2.19

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