Question
1. What is the beta of a portfolio with an expected return of 25% if the risk-free rate is 5% and the expected return of
1. What is the beta of a portfolio with an expected return of 25% if the risk-free rate is 5% and the expected return of the market is 15%?
2. A stock is currently selling for $75 per share. It will pay a dividend of $8 per share at year end. The stock has a beta of 1.1. The risk-free rate is 5% and the expected return on the market is 18%. What should investors expect the share price of the stock to be at the end of the year?
3. Investment advisor X had a return last year of 20% and a beta of 1.5. Investment advisor Y had a return of 16% and a beta of 0.9. The risk-free rate during the year was 4% and the market return was 18%. Which advisor had the best risk-adjusted performance?
Please use critical analysis and explain your answers; thank you experts!
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