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A corporation is operating in four sectors and holds total assets in value of 40...

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Finance

A corporation is operating in four sectors and holds total assets in value of 40 mil. The following data is available:

Sector

Beta

Sector weight%

Expected return

Constructions

0,5

30

Engineering

1,2

20

Installations

1,1

25

Heating

The risk-free rate of return is 5% and the expected return of the market portfolio is 10%.

  1. The expected return at equilibrium for the corporation is 10.2%. Compute the beta of the heating sector. (0.75 pct)

Compute the return expected in each sector.

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