Question

8. You are considering constructing portfolio comprised of equal investment in each of the following four stocks. Security Cannelloni has a beta of 2.5 and an expected return of 15%.

Security Pinto has an expected return of 8% and a beta of 1.0. Security Lima that has a beta of 0.5 and expected return of 15%. Security Navy with a beta of -1.5 and an expected return of 5%. a. What was the specific equation that results from the following general equation: .625 =1.5)+.25(.5)+ .25(1.0).25(2.5) + .25(-1.5)+.25(1.0)

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