Your portfolio is diversified. It has an expected return of 10.0% and a beta of .95. You want to add 500 shares of Company D's at $40 a share to your portfolio. Company D's has an expected return of...

Question:
Your portfolio is diversified. It has an expected return of 10.0% and a beta of .95. You want to
add 500 shares of Company D's at $40 a share to your portfolio. Company D's has an expected
return of 9.0% and a beta of .75. The total value of the investor's current portfolio is $60,000.
What is the expected return on the portfolio after the purchase of the company D's stock?
Solution:
In order to find the expected rate of return on the portfolio we need to assign the weights to each...