Question
A stock has a beta of 1.1 and an expected return of 13 percent. A risk-free asset currently earns 3.7 percent. a. What is the
A stock has a beta of 1.1 and an expected return of 13 percent. A risk-free asset currently earns 3.7 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. Omit the "%" sign in your response.) |
| Expected return | % |
| b. | If a portfolio of the two assets has a beta of .23, what are the portfolio weights? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) |
| Portfolio Weight | |
| xS | % |
| xrf | % |
| c. | If a portfolio of the two assets has an expected return of 12.25 percent, what is its beta? (Do not round intermediate calculations. Round your answer to 4 decimal places.) |
| Beta |
| d. | If a portfolio of the two assets has a beta of 1.32, what are the portfolio weights? (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) |
| Porfolio Weight | |
| xS | % |
| xrf | % |
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Bankers Handbook On Credit Management
Authors: Indian Institute Of Banking & Finance
1st Edition
9387957853, 978-9387957855
