Evaluating the return on the portfolio

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Qusetion: You have a portfolio of two stocks held in equal weights. The ABC stock has a beta of 1.5, and the XYZ stock has a beta of -0.2. The risk free rate is 5% and the market risk premium is 7%. What is the return on the portfolio?

You buy $1,000 shares IBM stock for $105 and 500 shares of Starbucks stock for $85. IBM stock goes down in value to $90/share, while Starbucks increases to $95/share. You do not sell or buy any additional shares. What is the return on your portfolio?

Reference no: EM132046916

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