Question
A stock has a beta of 1.55 and an expected return of 15 percent. A risk-free asset currently earns 2.2 percent. a. What is the
A stock has a beta of 1.55 and an expected return of 15 percent. A risk-free asset currently earns 2.2 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 (e.g., 32.16).) |
Expected return | % |
b. | If a portfolio of the two assets has a beta of .93, what are the portfolio weights? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) |
Weight of stock | |
Risk-free weight |
c. | If a portfolio of the two assets has an expected return of 8 percent, what is its beta? (Do not round intermediate calculations and round your answer to 3 decimal places (e.g., 32.161).) |
Beta |
d. | If a portfolio of the two assets has a beta of 3.1, what are the portfolio weights? (Do not round intermediate calculations. Negative amount should be indicated by a minus sign.) |
Weight of stock | |
Risk-free weight |
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