Given the following information about Stock A:
P0 = $62.75
βA = 1.3
D1 = $2.20 paid at end of year KM = 11% annual
Rf = 5% annual
a. Estimate the price of stock A at the end of the year
b. Suppose that Stock a is combined with two other stocks as follows:
Stock
A B C
Proportion Beta
0.25 1.3 0.40 0.9 0.35 1.1
What is the beta of the portfolio of three stocks?