Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A stock has a beta of 1.27 and an expected return of 12.5 percent. A risk-free asset currently earns 4.15 percent. a. What is the

A stock has a beta of 1.27 and an expected return of 12.5 percent. A risk-free asset currently earns 4.15 percent.

a. What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations and 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 .87, what are the portfolio weights? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.)

c. If a portfolio of the two assets has an expected return of 11.7 percent, what is its beta? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

d.If a portfolio of the two assets has a beta of 2.47, what are the portfolio weights? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.)

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_2

Step: 3

blur-text-image_3

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

Finance for Non Financial Managers

Authors: Pierre Bergeron

7th edition

176530835, 978-0176530839

More Books

Students also viewed these Finance questions

Question

36. Let p0 = P{X = 0} and suppose that 0 Answered: 1 week ago

Answered: 1 week ago

Question

BPR always involves automation. Group of answer choices True False

Answered: 1 week ago