A stock has a beta of 1.08 and an expected return of 12.02%. A risk-free asset has a return of 5% (this is the risk-free interest rate).

What is the market risk premium?

7.39%

11.50%

6.50%

7.02%

A stock has a beta of 1.08 and an expected return of 12.02%. A risk-free asset has a return of 5% (this is the risk-free interest rate).

What is the expected return of a portfolio that has 40% invested in the stock and 60% invested in the risk-free asset?

9.21%

8.51%

17.02%

7.81%

A stock has a beta of 1.08 and an expected return of 12.02%. A risk-free asset has a return of 5% (this is the risk-free interest rate).

You want to use the stock and the risk-free asset to form a portfolio that is equally as risky as the market portfolio. What is the portfolios weight in the risk-free asset?

86.25 percent

7.41 percent

92.59 percent

100 percent