Portfolia Beta and CAPM ) You are putting together a portfolio made up of four different stocks. However, you are considering two possible weightings: Portfolio Weightings Asset Beta First Portfolio Second Portfolio A 2 12% 38% B 0.95 12% 38% C 0.45 38% 12% D -1.7 38% 12%
a.What is the beta on each portfolio?
b.Which portfolio is riskier?
c.If the risk-free rate of interest were 3.5 percent and the market risk premium were 5.5 percent, what rate of return would you expect to earn from each of the portfolios?