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A stock has a beta of 1.2 and an expected return of 15%. A risk-free asset currently earns 3%. a) What is the expected return
A stock has a beta of 1.2 and an expected return of 15%. A risk-free asset currently earns 3%. a) What is the expected return on a portfolio that is invested 70% in the stock and 30% in the risk-free
asset? [2%] b) If a portfolio of the two assets has a beta of 0.85, what are the portfolio weights? [2%] c) If a portfolio of the two assets has an expected return of 10%, what is its beta? [2%]
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