Calculate the expected return on portfolio


Problem:

Suppose the dividend yield on market index is 2% per annum and the risk-free rate is 7% per annum. The beta of your stock portfolio is 1.5. Assume the index level changes by 10% in 4 months.

Required:

Question 1: Calculate the expected return on your portfolio in 4 months.

Note: Please explain comprehensively and give step by step solution.

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Accounting Basics: Calculate the expected return on portfolio
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