Consider the following data:
The riskless rate is 10%,and the expected return on the market is 20%.Your portfolio consists of 50,000 shares of ABC and 10,000 shares of XYZ.
a. Give the values of the following statistics for your portfolio: dividend yield; expected prices for ABC and XYZ in one year; beta; and alpha.
b. Suppose you are in the 40% effective marginal tax bracket and you plan to hold your portfolio more than one year. What is the expected after-tax return on your portfolio? What is the expected after-tax return on the market portfolio?
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