If you invest 35 of your holdings in a security with an


NEED THE FORMULAS USED STEP BY STEP :

1. If you invest 35% of your holdings in a security with an expected return of 8% and the remainder in a security with an expected return of 13%, what is the expected return on your portfolio?

2. Suppose that we have identified two important systematic risk factors: the growth rate of gross domestic product, labeled GDP, and the 30-year bond interest rate, labeled BR. Whole Hog Farms, Inc. has a beta 1.1 on GDP and 0.9 on BR. Whole Hog has an expected stock return of 12%. GDP is expected to be 5.5% and BR 6%. If gross domestic product grows by 3% and the 30-year bond rate turns out to be 9%, and no unexpected news specifically concerning Whole Hog occurs, within the Arbitrage Pricing Theory framework, what is your best guess for the realized rate of return on Whole Hog stock?

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Financial Management: If you invest 35 of your holdings in a security with an
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