Problem: Suppose you have invested $50,000 in the following four stocks:
| Security |
|
Amount Invested |
|
Beta |
| Stock A |
|
$10,000 |
|
|
0.7 |
| Stock B |
|
15,000 |
|
|
1.2 |
| Stock C |
|
12,000 |
|
|
1.4 |
| Stock D |
|
13,000 |
|
|
1.9 |
The risk-free rate is 5 percent and the expected return on the market portfolio is 18 percent.
Based on the capital-asset-pricing model, what is the expected return on the above portfolio?