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 4 decimal places, e.g., 32.1616.) 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. Round your answer to 3 decimal places, e.g., 32.161.) Beta d. If a portfolio of the two assets has a beta of 3.10, 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
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started