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Jerry's portfolio - beta

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Jerry's portfolio is invested equally in five stocks (that is, each stock in the portfolio has a weight of 0.20) and has a required return of 9.4%. The risk-free rate is 5% and the market risk premium is 4%. What is the portfolio's beta? Assume that Jerry's portfolio is on the SML. I put answer 1.100

The last stock to this portfolio is Lauren CLothing Co., which has a beta of 0.40. What was the portfolio's beta before Lauren's stock was added? (Remember that it was a four-stock portfolio before the last stock was added.)

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Jerry's portfolio - beta

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By CAPM, E(portfolio) = rf + beta(E(market) - rf). E(market) - rf is also known as risk premium.

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