A stock has a beta of 1.6 and an expected return of 14 percent. A risk-free asset currently earns 4 percent.

a) What is the expected return on a portfolio that is equally invested in the two assets?

b) If a portfolio of the two assets has a beta of 0.8, what are the portfolio weights?

c) If a portfolio of the two assets has an expected return of 10 percent, what is its beta?

d) If all assets in the economy are correctly priced, what is the expected return on the market portfolio?