A stock has a beta of 1.1 and an expected return of 15 percent. A risk-free asset
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A stock has a beta of 1.1 and an expected return of 15 percent. A risk-free asset currently earns 5 percent.
a. What is the expected return on a portfolio that is equally invested in the two assets?
b. If a portfolio of the two assets has a beta of .6, what are the portfolio weights?
c. If a portfolio of the two assets has an expected return of 9 percent, what is its beta?
d. If a portfolio of the two assets has a beta of 2.20, what are the portfolio weights? How do you interpret the weights for the two assets in this case? Explain.
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Related Book For
Fundamentals Of Corporate Finance
ISBN: 9780072553079
6th Edition
Authors: Stephen A. Ross, Randolph Westerfield, Bradford D. Jordan
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