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 8.6 % 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 4 decimal places, e.g., 32.1616.) Weight of stock .60 Risk-free weight .40 c. If a portfolio of the two assets has an expected return of 8 percent, what is its beta? (Do not round intermediate calculations. Round your answer to 3 decimal places, e.g., 32.161.) Beta .702 d. If a portfolio of the two assets has a beta of 3.10, what are the portfolio weights? (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Enter your answers as a whole number.) Weight of stock Risk-free weight only looking for part D
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