You hold a portfolio of three stocks with the following investments and individual betas.
Stock A $15,000; beta of 1.75
Stock B $40,000; beta of 0.90
Stock C $20,000; beta of 1.40
a) What is the portfolio beta? Show all work.
b) If the current risk-free rate of return is 3% and the return on an average risk security, r(m), is 7%, what is the required rate of return on the portfolio? Show all work.