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A stock has a beta of 1.33 and an expected return of 13.1 percent. A risk-free asset currently earns 4.45 percent. a. What is
A stock has a beta of 1.33 and an expected return of 13.1 percent. A risk-free asset currently earns 4.45 percent. a. What is the expected return on a portfolio that is equally invested in the two assets? Note: 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 .93, what are the portfolio weights? Note: 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 12.3 percent, what is its beta? Note: 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 2.53, what are the portfolio weights? Note: 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. a. Expected return 8.78 % 0.6992 b. Weight of stock Weight of risk-free asset 0.3008 c. Beta d. Weight of stock Weight of risk-free
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a To calculate the expected return on a portfolio that is equally invested in the two assets we can use the weighted average formula Expected Return o...Get Instant Access to Expert-Tailored Solutions
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