Question
A stock has a beta of 0.7 and an expected return of 11 percent. A risk-free asset currently earns 4.2 percent. a. What is the
A stock has a beta of 0.7 and an expected return of 11 percent. A risk-free asset currently earns 4.2 percent.
a. What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
b. If a portfolio of the two assets has a beta of 0.64, what are the portfolio weights? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
c. If a portfolio of the two assets has an expected return of 8.50 percent, what is its beta? (Do not round intermediate calculations. Round your answer to 4 decimal places.)
d. If a portfolio of the two assets has a beta of 1.07, what are the portfolio weights? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
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