Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A stock has a beta of 1.35 and an expected return of 13.3 percent. A risk-free asset currently earns 4.55 percent. a. What is the

image text in transcribed
A stock has a beta of 1.35 and an expected return of 13.3 percent. A risk-free asset currently earns 4.55 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.9., 32.16. b. If a portfolio of the two assets has a beta of 95 , what are the portfollo 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 12.5 percent, what is its beta? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.9. 32.16. d. If a portfolio of the two assets has a beta of 2.55, 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.9. .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

Step: 3

blur-text-image

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

The Franchise Handbook A Complete Guide To All Aspects Of Buying Selling Or Investing In A Franchise

Authors: Atlantic Publishing Co

1st Edition

0910627541, 978-0910627542

More Books

Students also viewed these Finance questions

Question

Once you have a job, what steps can you take to be successful?

Answered: 1 week ago