Did I calculate this correctly? If not, what am I doing incorrectly? Suppose Intel stock has a beta of 1.72, whereas Boeing stock has a beta of 0.99. If the risk-free interest rate is 3.5% and the...

Did I calculate this correctly?  If not, what am I doing incorrectly?

Suppose Intel stock has a beta of 1.72, whereas Boeing stock has a beta of 0.99. If the risk-free interest rate is 3.5% and the expected return of the market portfolio is 12.5%, according to the CAPM,

1. What is the expected return of Intel stock?Expected return of stock = .1898 = 19%;
   Expected return of Intel stock is > the market return of 12.5% since Intel Beta is greater than 1
   


2. What is the expected return of Boeing stock?Expected return of stock = .1241 = 12%;
   Expected return of Boeing stock is < market="" return="" of="" 12.5%="" since="" boeing="" beta="" is="" less="" than="">
   


3. What is the beta of a portfolio that consists of 65% Intel stock and 35% Boeing stock?
   
   
   
   • Find the Beta of the portfolio:
   
   
   • Beta Portfolio Formula = Weight*Beta + Weight*Beta
   
   
   • Beta Portfolio Formula = (.65)(1.72) + (.35)(0.99)
   
   
   • 118 + .3465
   
   
   • 
     Portfolio Beta @ 65% Intel and 35% Boeing = 1.4645 = 1.465
     
   
   
   
   

4. What is the expected return of a portfolio that consists of 65% Intel stock and 35% Boeing stock?

• 
  
  
  
  • Find the portfolio expected return
  
  
  • Portfolio Expected Return = Risk Free Rate + Portfolio Beta x Market Rate
  
  
  • Portfolio Expected Return = 3.5% + 1.465 x 12.5%
  
  
  • Portfolio Expected Return = 3.5% + .183125
  
  
  • 
    Portfolio Expected Return =.218125 =21.81%