1. What is the portfolio beta for a portfolio of five stocks A, B, C, D, and E. with required rates of return of 10%, 12%, 11%, 9%, and 14%, respectively and betas of -1,+2,+1.5,+1.25, and +.7, respectively? The investment in each stock is 100 shares and the prices are A=15, B=25, C=27,D=12, and E=34.
2. If you sell stock A, above and invest the proceeds in stock F at the same price with a beta of .5 what would be the portfolio return?
3. What would be the beta, if the portfolio was as above with the addition of stock F?