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