, FIN2601 ASSIGNMENT 1 SEMESTER 1 2026
ANSWERS
DUE DATE: 16 APRIL 2026
UNIQUE NUMBER: 792539
1.1 Expected Return of the Market Portfolio (6 marks)
The expected market return is calculated by taking the probability-weighted average of all
possible market returns. The table below shows the calculations:
Probability Market Return Probability × Market Return
0.1 10% 1.0%
0.2 12% 2.4%
0.4 13% 5.2%
0.2 16% 3.2%
0.1 17% 1.7%
Total Expected Market Return 13.5%
The expected return of the market portfolio is therefore 13.5 percent.
1.2 Beta Coefficient of the Portfolio (10 marks)
The beta of the portfolio is calculated as a weighted average of the betas of the subsidiaries,
using the proportion of total investment in each subsidiary as the weight. The total
investment by Transportation Hero is R500 million.
Investment (R Investment Weighted
Subsidiary Beta
million) Weight Beta
ANSWERS
DUE DATE: 16 APRIL 2026
UNIQUE NUMBER: 792539
1.1 Expected Return of the Market Portfolio (6 marks)
The expected market return is calculated by taking the probability-weighted average of all
possible market returns. The table below shows the calculations:
Probability Market Return Probability × Market Return
0.1 10% 1.0%
0.2 12% 2.4%
0.4 13% 5.2%
0.2 16% 3.2%
0.1 17% 1.7%
Total Expected Market Return 13.5%
The expected return of the market portfolio is therefore 13.5 percent.
1.2 Beta Coefficient of the Portfolio (10 marks)
The beta of the portfolio is calculated as a weighted average of the betas of the subsidiaries,
using the proportion of total investment in each subsidiary as the weight. The total
investment by Transportation Hero is R500 million.
Investment (R Investment Weighted
Subsidiary Beta
million) Weight Beta
