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4. A stock has a beta of 1.13 and an expected return of 12.1 percent. A risk-fee asset currently earns 5 percent. a) What is
4. A stock has a beta of 1.13 and an expected return of 12.1 percent. A risk-fee 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 0.50, what are the portfolio weights? c) If a portfolio of the two assets has an expected return of 10 percent, what is its beta? d) If a portfolio of the two assets has a beta of 2.26, what are the portfolio weights? How do you interpret the weights for the two assets in this case? Explain?
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