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Business, 28.05.2020 06:58 tashatyron24pejls0

Wilson holds a portfolio that invests equally in three stocks (
w
A
wA
=
w
B
wB
=
w
C
wC
= 1/3). Each stock is described in the following table:
Stock
Beta
Standard Deviation
Expected Return
A
0.5
23%
7.5%
B
1.0
38%
12.0%
C
2.0
45%
14.0%

An analyst has used market- and firm-specific information to generate expected return estimates for each stock. The analyst’s expected return estimates may or may not equal the stocks’ required returns. You’ve also determined that the risk-free rate is 4%, and the market risk premium is 5%.

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Wilson holds a portfolio that invests equally in three stocks (
w
A
wA
=
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