How to calculate a portfolio’s required return?

43. Consider the following three individuals’ portfolios consisting of investments in four stocks:

Stock

Beta

Peter’s Investment

Paul’s Investment

Mary’s Investment

Eenie

1.3

2,500

5,000

10,000

Meenie

1.0

2,500

5,000

10,000

Minie

0.8

2,500

5,000

-5,000

Moe

-0.5

2,500

-5,000

-5,000

Required: Assuming that the risk-free rate is 4% and the expected return on the market is 12%, then calculate the required return on Mary’s portfolio.

 
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