1) A stock has a beta of 1.08 and has expected rate of return of 11.6 percent. A risk-free asset currently earns 3.6 percent. What is the expected rate of return on a portfolio that is equally invested in the two assets?

A) 12.12%

B) 11.15%

C) 12.24%

D) 11.24%

2) A stock has a beta of 1.08 and has expected rate of return of 11.6 percent. A risk-free asset currently earns 3.6 percent. If a portfolio of the two assets has a beta of 0.50, what are the portfolio weights?

A) 0.46; 0.54

B) 0.63; 0.37

C) 0.57; 0.43

D) None of these

3) A stock has a beta of 1.08 and has expected rate of return of 11.6 percent. A risk-free asset currently earns 3.6 percent. If a portfolio of the two assets has an expected return of 10.5 percent, what is the beta? A) 0.90

B) 0.93

C) 0.98

D) 0.89

4) A stock has a beta of 1.08 and has expected rate of return of 11.6 percent. A risk-free asset currently earns 3.6 percent. If a portfolio of the two assets has a beta of 2.16, what are the portfolio weights? How do you interpret the weights of the two assets in this case? Explain.

A) 1.50; -0.50

B) 0.82; 0.18

C) 0.65; 0.35

D) 2.00; -1.00