Raj has recently created his portfolio and he has provided the information given below: Security Amount Invested (₹) Expected Return (%) Beta Stock A 10,000 8 0.80 Stock B 20,000 12 0.95 Stock C 30,000 15 1.10 Stock D 40

Calculation of expected returns E(R) from the portfolio Security Amount invested (₹) Weights (W) Expected return (%) Expected return * W Stock A 10,000 0.10 8 0.8 Stock B 20,000 0.20 12 2.4 Stock C 30,000 0.30 15 4.5 Stock D 40,000 0.40 18 7.2 Total 1,00,000 14.9 E(R) = 14.9% Calculation of Portfolio Beta Security Beta (β) Weights (W) β * W Stock A 0.80 0.10 0.08 Stock B 0.95 0.20 0.19 Stock C 1.10 0.30 0.33 Stock D 1.40 0.40 0.56 Total 1.16 Portfolio Beta = 1.16 Comment: The portfolio has expected return of 14.9% and beta of 1.16. As the beta is greater than 1, this portfolio has greater systematic risk than an average asset.