The manager of alpha beta funds is considering addition of


The manager of Alpha Beta Funds is considering addition of the following stocks in his portfolio:

Stocks Standard Deviation Covariance                  Expected (Ri)

            A                                 18%                             0.012                           20%

            B                                 15%                             0.0075                         12%

            C                                 10%                             0.011                           14%

            D                                 20%                             0.0175                         16%

            E                                  14%                             0.016                           15%

            RM                               10%                             1.0                               14%

            RF                                0                                  0.9                               6%

A) Calculate the required rate of return for each stock.

B) Assume you are assistant to a portfolio manager, which stocks you recommend to be included in his portfolio?

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Financial Management: The manager of alpha beta funds is considering addition of
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