Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A stock has a beta of 1.2 and an expected return of 9 percent. A risk-free asset currently earns 3.3 percent. a. What is the
A stock has a beta of 1.2 and an expected return of 9 percent. A risk-free asset currently earns 3.3 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.) Answer is complete and correct. Expected return 6.15% b. If a portfolio of the two assets has a beta of 35, what are the portfolio weights? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Answer is complete and correct. Stock Portfolio Weight 29.17% 70.83 % Risk-free asset c. If a portfolio of the two assets has an expected return of 11.25 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 1.44, 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.) Answer is complete but not entirely correct. Stock Portfolio Weight 1.20 % 0.00 X % Risk-free asset
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started