Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A stock has a beta of 1.25 and an expected return of 15 percent. A risk-free asset currently earns 3.2 percent. a. What is the

A stock has a beta of 1.25 and an expected return of 15 percent. A risk-free asset currently earns 3.2 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, e.g., 32.16.)

image text in transcribed

A stock has a beta of 1.25 and an expected return of 15 percent. A risk-free asset currently earns 3.2 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, e.g., 32.16.) b. If a portfolio of the two assets has a beta of .75, what are the portfolio weights? (Do not round intermediate calculations. Round your answers to 4 decimal places, e.g., 32.1616.) c. If a portfolio of the two assets has an expected return of 9 percent, what is its beta? (Do not round intermediate calculations. Round your answer to 3 decimal places, e.g., 32.161.) d. If a portfolio of the two assets has a beta of 2.50, what are the portfolio weights? (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Enter your answers as a whole number.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance Terms Financial Education Is Your Best Investment

Authors: Thomas Herold

1st Edition

1090822871, 978-1090822871

More Books

Students also viewed these Finance questions

Question

1. Identify three approaches to culture.

Answered: 1 week ago

Question

3. Identify and describe nine cultural value orientations.

Answered: 1 week ago

Question

4. Describe how cultural values influence communication.

Answered: 1 week ago