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4a. You have been tasked to determine the equation that describes the equilibrium returns for the following portfolios: (9 points) Portfolio Expected Return (%) Bit

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4a. You have been tasked to determine the equation that describes the equilibrium returns for the following portfolios: (9 points) Portfolio Expected Return (%) Bit Biz A B 18.6 25.0 30.4 1.6 2.0 2.4 0.8 1.2 1.5 4b. Assume there is a portfolio D with BD1 = 1.8. What is the equilibrium return on portfolio D? What is the sensitivity of portfolio D to factor 2 BD2? What is the relationship of portfolio D to factor 2? (4 points) 4c. Suppose there is another portfolio E with the following characteristics: Actual Return = 28%; Be1 = 2.0 and Be2 = 1.5. Would you recommend investment in portfolio E? Why? (2 points) 4a. You have been tasked to determine the equation that describes the equilibrium returns for the following portfolios: (9 points) Portfolio Expected Return (%) Bit Biz A B 18.6 25.0 30.4 1.6 2.0 2.4 0.8 1.2 1.5 4b. Assume there is a portfolio D with BD1 = 1.8. What is the equilibrium return on portfolio D? What is the sensitivity of portfolio D to factor 2 BD2? What is the relationship of portfolio D to factor 2? (4 points) 4c. Suppose there is another portfolio E with the following characteristics: Actual Return = 28%; Be1 = 2.0 and Be2 = 1.5. Would you recommend investment in portfolio E? Why? (2 points)

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