1. You hold the positions in the table below. What is the beta of your portfolio
ID: 2622311 • Letter: 1
Question
1. You hold the positions in the table below.
What is the beta of your portfolio? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
If you expect the market to earn 10.00 percent and the risk-free rate is 6.00 percent, what is the required return of the portfolio? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
AssumedPrice Shares Assumed
Beta Advanced Micro Devices $ 32.00 495 3.75 FedEx Corp 219.00 80 1.31 Microsoft 22.00 128 1.34 Sara Lee Corp 19.00 219 0.58
Explanation / Answer
total market value = 495*32+219*80+22*128+19*219
=40337
=> portfolio beta = (495*32/40337)*(3.75)+(219*80/40337)*(1.31)+(22*128/40337)*(1.34)+(19*219/40337)*(0.58)
=2.1949
=2.19 (appx)
ans beta of portfolio =2.19
b) required return = risk free rate+beta*(market return-risk free rate)
=6%+2.1949*(10%-6%)
=14.7798%
=14.78%
ans: required retutn =14.78%
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