John's portfolio is made up of A and B with characteristics as shown on the following table. The portfolio has 40% in A and the rest in B. The risk free rate is 2.5%.
Investment return beta alpha
A 4.0% 1.20 -0.5%
B 7.0% 1.50 0.4%
a. What is the return on John's portfolio?
b. What is the beta of John's portfolio?
c. What is the alpha of John's portfolio?