6 23 Portfolio beta and security market line You own a portfolio consisting of the...

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6 23 Portfolio beta and security market line You own a portfolio consisting of the x stocks below MyLab STOCK OR SECURITY 1 2 4 5 PERCENTAGE OF PORTFOLIO 20 30 15 25 10 C BETA 1 00 0 85 1 20 0 60 1 60 The risk free rate is 3 percent Also the expected return on the market portfolio is 11 percent EXPECTED RETURN 12 8 12 7 16 a Calculate the expected return of your portfolio Hint The expected return of a portfolio equals the weighted average of the individual stocks expected returns where the weights are the percentage invested in each stock 1 10

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