Plesee assist me with the following question Solution Securi

Plesee assist me with the following question

Solution

Security A Security B Security C Expected returns 12% 18% 9% Risk Free Rate 3% Market premium 6% Market Rate 9% 6%+3% Excess of security A with risk free rate 9% 12%-3% Market premium 6% Beta 0.09/0.06 1.5 Excess of security B with risk free rate 15% 18%-3% Market premium 6% Beta 0.15/0.06 2.5 Excess of security C with risk free rate 6% 9%-3% Market premium 6% Beta 0.06/0.06 1 Expected return 0.20*0.12 + 0.45*0.18 + 0.35*0.09 0.1365 13.65% Excess of portfolio return with risk free rate 10.6500% 13.65%-3% Market premium 6% Beta 0.1065/0.06 1.775