Question
A stock has a beta of 1.70 and an expected return of 12 percent. A risk-free asset currently earns 2.8 percent. a. What is the
A stock has a beta of 1.70 and an expected return of 12 percent. A risk-free asset currently earns 2.8 percent.
a. What is the expected return on a portfolio that is equally invested in the two assets? (Round your answer to 2 decimal places. (e.g., 32.16))
b. If a portfolio of the two assets has a beta of 1.02, what are the portfolio weights? (Round your answer to 4 decimal places. (e.g., 32.1616))
c. If a portfolio of the two assets has an expected return of 10 percent, what is its beta? (Do not round intermediate calculations and round your answer to 3 decimal places. (e.g., 32.161))
d. If a portfolio of the two assets has a beta of 3.40, what are the portfolio weights? (Negative amount should be indicated by a minus sign.)
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