Risk-free rate and expected return on the market

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Reference no: EM13920417

Company A stock sells at $55 a share. It has β = 1.25 and σ = .44. The risk-free rate is 4%, and the expected return on the market is 11%. You have formed a portfolio with these two items in it:

(1) 1000 shares of Fort Worth stock.

(2) A zero-coupon risk-free bond with face value $46,800, maturing after 1 year.

Calculate the following:

(A) Initial value of the portfolio

(B) Expected value of the portfolio after one year

Reference no: EM13920417

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