Solved: Explain a capital-asset-pricing model, Financial Management

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Explain a capital-asset-pricing model

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Q: Suppose you have invested $50,000 in the following four stocks:

Security Amount Invested Beta
Stock A $10,000 0.7
Stock B 15,000 1.2
Stock C 12000 1.4
Stock D 13000 1.9

The risk-free rate is 5 percent and the expected return on the market portfolio is 18 percent.

Based on the capital-asset-pricing model, what is the expected return on the above portfolio?

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Financial Management: Explain a capital-asset-pricing model

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Financial Management: Explain a capital-asset-pricing model

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