Problem:
An investor is forming a portfolio by investing 150,000 in a stock A which has a beta of 1.50 and $250,000 in stock B which has a beta 0.80. The return on the market is equal to 5 percent and Treasury bonds have a yield of 3 percent.
Required:
Question: What is the required rate of return on the investor's portfolio?
Note: Please explain comprehensively and give step by step solution.