Ue the following datanbspmarket risk premium


Use the following data:

Market risk premium = 8.5%

Risk-free rate = 3%

Beta of XYZ stock = 1.4

Beta of PDQ stock = 2.0

Investment in XYZ stock = $70,000

Investment in PDQ stock = $130,000

You have no assets other than your investments in XYZ and PDQ stock.

What is the expected return of your portfolio? Show all work.

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Finance Basics: Ue the following datanbspmarket risk premium
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