Question
A stock has a beta of 1.32 and an expected return of 13 percent. A risk-free asset currently earns 4.4 percent. Required: (a) What is
A stock has a beta of 1.32 and an expected return of 13 percent. A risk-free asset currently earns 4.4 percent. |
Required: | |
(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 percentage rounded to 2 decimal places (e.g., 32.16).) |
Expected return | % |
(b) | If a portfolio of the two assets has a beta of 0.92, what are the portfolio weights? (Do not round intermediate calculations. 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 12.2 percent, what is its beta? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) |
Beta |
(d) | If a portfolio of the two assets has a beta of 2.52, what are the portfolio weights? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).) |
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