Question
A stock has a beta of 1.60 and an expected return of 10 percent. A risk-free asset currently earns 2.4 percent. a. What is the
A stock has a beta of 1.60 and an expected return of 10 percent. A risk-free asset currently earns 2.4 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 .88, 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 9 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 3.20, 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 |
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