Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

CAPM and Portfolios A stock has a beta of 1.2 and a return of 16%. A risk-free asset currently earns 5%. What is the beta

CAPM and Portfolios

A stock has a beta of 1.2 and a return of 16%. A risk-free asset currently earns 5%.

  1. What is the beta of the risk-free asset?
  2. What is the return on the portfolio that is equally invested in the two assets (i.e. stock and risk-free asset)?
  3. If a portfolio of the two assets has a beta of 0.75, what are the portfolio weights?
  4. If a portfolio of the two assets has an return of 8%, what is its beta?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

Recommended Textbook for

International Accounting

Authors: Timothy Doupnik, Mark Finn, Giorgio Gotti, Hector Perera

5th edition

1259747980, 9781259747984, 1260466531, 978-1260466539

More Books

Students also viewed these Accounting questions

Question

4. What means will you use to achieve these values?

Answered: 1 week ago