Author Question: If Geek Computer has a beta of .8, the return from Treasury bills is 3 and the return from the ... (Read 101 times)

fahad · **on:** Jul 10, 2018

If Geek Computer has a beta of .8, the return from Treasury bills is 3 and the return from the market portfolio is 20, what is the required return from Geek stock?

A) 16.6
B) 15.7
C) 22.8
D) 20.0
E) 17.5

Question 2

Assume that both Apple and Yahoo plot on the SML. Apple has a beta of 2.6 and an expected return of 21.2. Yahoo has a beta of 0.90 and an expected return of 9.3.

The expected return on the market portfolio is 10and the risk-free rate is 3. If you wish to hold a portfolio consisting of Apple and Yahoo and have a portfolio beta equal to 1.5, what proportion of the portfolio must be in Apple? What is the expected return on the portfolio?

Apple Yahoo Market Portfolio Risk-free Asset
Beta 2.6 0.9 1.0 0.0
Expected Return 21.2 9.3 10.0 3.0
What will be an ideal response?

mjbamaung · **Reply #1 on:** Jul 10, 2018

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