Question
6.You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 2.02 and the
6.You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 2.02 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio?Answer to two decimals.
7.A stock has an expected return of 10.28 percent, the risk-free rate is 2.11 percent, and the market risk premium is 4.86 percent. What must the beta of this stock be?Answer to two decimals.
8.Stock Y has a beta of 0.6 and an expected return of 9.34 percent. Stock Z has a beta of 2.1 and an expected return of 13.97 percent. What would the risk-free rate (in percent) have to be for the two stocks to be correctly priced relative to each other?Answer to two decimals.
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