A stock has a beta of 1 the expected return on the market


1. A stock has a beta of 1, the expected return on the market is 5.9 percent, and the risk-free rate is 2.5 percent. What must the expected return on this stock be?

2. You own a stock portfolio invested 20 percent in Stock Q, 43 percent in Stock R, 10 percent in Stock S, and 27 percent in Stock T. The betas for these four stocks are 0.5, 0.4, 0.6, and 0.7, respectively. What is the portfolio beta?

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Financial Management: A stock has a beta of 1 the expected return on the market
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