Johns portfolio is made up of a and b with characteristics


John's portfolio is made up of A and B with characteristics as shown on the following table. The portfolio has 40% in A and the rest in B. The risk free rate is 2.5%.

Investment return beta alpha

A 4.0% 1.20 -0.5%

B 7.0% 1.50 0.4%

a. What is the return on John's portfolio?

b. What is the beta of John's portfolio?

c. What is the alpha of John's portfolio?

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Financial Management: Johns portfolio is made up of a and b with characteristics
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