Question
A stock has a beta of 1.3 and an expected return of 15 percent. A risk-free asset currently earns 3.9 percent. a. What is the
A stock has a beta of 1.3 and an expected return of 15 percent. A risk-free asset currently earns 3.9 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.)
b. If a portfolio of the two assets has a beta of .17, what are the portfolio weights? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
c. If a portfolio of the two assets has an expected return of 12.75 percent, what is its beta? (Do not round intermediate calculations. Round your answer to 4 decimal places.)
d. If a portfolio of the two assets has a beta of 1.48, 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.)
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Finance Applications And Theory
Authors: Marcia Millon Cornett, John R. Nofsinger, Troy Adair
3rd International Edition
1259252221, 9781259252228
