Question
A stock has a beta of 1.2 and an expected return of 10%. The risk free asset currently earns 4%. If a portfolio of the
A stock has a beta of 1.2 and an expected return of 10%. The risk free asset currently earns 4%. If a portfolio of the two assets has an expected return of 8%, what is its beta?
A. 0.3
B. 0.6
C. 0.8
D. 1.2
I would like to know both the answer and how the answer was found. Thank you!
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Accounting Tools for Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
5th edition
9780470418239, 470239808, 9780470239803, 470418230, 978-1118128169
