1. Ali invests 70% of his portfolio in Qibla Cola and 30% in Sahabah Shoes. The expected dollar return on Qibla Cola is 15% with a standard deviation of 23%, while for Sahabah shoes it’s 40% with a standard deviation 51%. By assuming beta of Qibla Cola is 0.9 and beta of Sahabah Shoes is 1.3, T-bills rate is 5% and the market premium risk is 7%, do the following:
Based on the above data, what is the portfolio's beta?
a. 0.98
b. 1.14
c. 0.85
d. 1.02
e. 1.15
2. Assume the risk free rate is 8%, required return is 15% and market return is 14%, the beta of the stock is if the market risk of a stock is more than the average, a possible value of Beta would be
a. 1.5
b. -0.5
c. 0.8
d. 1.0
e. None of these