A portfolio is invested 30% in shares of Aces Ltd, 50% in shares of Braces Ltd and 20% in shares of Cases Ltd. The expected returns of these shares are 8%, 12% and 19% respectively. Calculate the expected return of the portfolio.
An investment in MotorBoat Ltd has a beta of 0.8, the expected return on the market is 12%, and the risk free rate is 3%. Calculate the expected return on this investment.
If the average market asset has a beta of 1.0, explain what the beta of 0.8 for MotorBoat Ltd tells us about the riskiness of this investment.