Use the table for the question(s) below.
Consider the following three individuals' portfolios consisting of investments in four stocks:

-Assuming that the risk-free rate is 4% and the expected return on the market is 12%,then required return on Paul's portfolio is closest to:
A) 20%
B) 22%
C) 18%
D) 16%

Question

Use the table for the question(s) below.
Consider the following three individuals' portfolios consisting of investments in four stocks:
 
-Assuming that the risk-free rate is 4% and the expected return on the market is 12%,then required return on Paul's portfolio is closest to:
A) 20% 
B) 22% 
C) 18% 
D) 16%

Quizplus · Accepted Answer

C) p_ortfolio = Σx_ib_i r_i = r_f + b(E[R_Mkt] - r_f) = .04 + 1.8(.12 - .04) = .184 11ea7e5a_6e74_8d8a_9a0a_cd076781b1ab_TB1623_00

Use the Table for the Question(s) Below