Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Anakin forms an aggressive growth portfolio by investing 2 1 % of his savings in GM stock, 2 0 % in Nissan stock, 2 4

Anakin forms an aggressive growth portfolio by investing 21% of his savings in GM stock, 20% in Nissan stock, 24% in Subaru stock, 11% in an index fund, and the last 24% is allocated on a bond fund. Assume for simplicity that the index fund is a good proxy to the market portfolio and has a beta equal to 1, whereas the bond fund is a good proxy to the riskless asset. The beta of GM stock is 1.23, the beta of Nissan is 1.46, and the beta of Subaru is 1.76. If the expected return of the market index is 13% and the risk-free asset yields 7%, what are the beta and the expected return of Anakins portfolio? Give your answer rounded to two decimal places.
This question has 2 parts (i.e., you will be clicking "Verify" twice).
What is the beta of the portfolio?
\beta P
=
Number

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions