Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

a . Calculate the betas for portfolios A and B . b . If the risk - free rate is 2 . 3 % and

a. Calculate the betas for portfolios A and B.
b. If the risk-free rate is 2.3% and the market return is 7.7%, calculate the required return for each portfolio using the CAPM.
a. The beta of portfolio A is
(Round to three decimal places.)
The beta of portfolio B is
(Round to three decimal places.)
b. The required return of portfolio A is
%.(Round to two decimal places.)
The required return of portfolio B is
%.(Round to two decimal places.)
c. The weighted return of portfolio A is
%.(Round to two decimal places.)
The weighted return of portfolio B is
%.(Round to two decimal places.)
Since the market return is expected to be (1)
, he should probably choose the portfolio with the higher beta, portfolio (2)
(Select from the drop-down menus.)
1: Data Table
(Click on the icon here in order to copy the contents of the data table below into a spreadsheet.)
2: Data Table
(Click on the icon here in order to copy the contents of the data table below into a spreadsheet.)
(1) positive
(2)A
negative
B
unchanged
A or B
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Finance For Executives Managing For Value Creation

Authors: Gabriel Hawawini, Claude Viallet

2nd Edition

0324117752, 9780324117752

More Books

Students also viewed these Finance questions