Answer:
Exptected return = 11.2%
Beta = 1.23
Explanation:
The post-purchase expected return of the portfolio is the weighted average return of Syngine stock and pre-purchase return of the portfolio, calculated as below:
Post-purchase portfolio return = (Market value of Synhine stock purchase/Total market value of post-purchase portfolio)x Syngine stock return + (Market value of pre-purchase porfolio/Total market value of post-purchase portfolio) x Pre-purchase return
= [(1,000 x 10)/(1,000 x 10 + 90,000)] x 13% + [(90,000)/(1,000 x 10 + 90,000)] x 11% = 11.2%
Using the same concept, beta of the post-purchase is calculated as below:
Post-purchase portfolio beta = [(1,000 x 10)/(1,000 x 10 + 90,000)] x 1.5 + [(90,000)/(1,000 x 10 + 90,000)] x 1.2 = 1.23