Question
A stock has a beta of 1.31 and an expected return of 12.9 percent. A risk-free asset currently earns 4.35 percent. a. What is the
A stock has a beta of 1.31 and an expected return of 12.9 percent. A risk-free asset currently earns 4.35 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.) Expected return % b. If a portfolio of the two assets has a beta of .91, what are the portfolio weights? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)
Weight of the stock | |
Weight of the risk-free asset | |
c. If a portfolio of the two assets has an expected return of 12.1 percent, what is its beta? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Beta d. If a portfolio of the two assets has a beta of 2.51, 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., 32.1616.)
Weight of the stock | |
Weight of the risk-free asset | |
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