Consider the following information on Pepsi and Apple stocks. Beta Standard Deviation Pepsi 0.39 12% Apple 1.25 36% The expected return on the market portfolio Is 12% and its standard deviation is 24%. The risk free rate is 6%. The correlation coefficient between Pepsi and Apple is 0.65. Assume that CAPM holds. There are no short-selling restrictions, and you can borrow and lend at the risk-free rate. {Round your final answers to 2 decimal places. Enter percentages "as-is, without the sign, enter welonts as decimals te...5.0735 return would be entered as 5.37. A weight of 0.257 would be entered as 0.26)). a) Find the expected returns on Pepsi and Apple Pepsi % Apple b) Imagine you have $1000 cash to invest. You short-sell 5500 worth of Pepsi and put the proceeds along with your own capital into the Apple stock (total of $1500). What is the expected retum and standard deviation of this portfolio? Standard Deviation Expected Return a) Find the expected returns on Pepsi and Apple. Pepsi % Apple b) Imagine you have $1000 cash to invest. You short-sell $500 worth of Pepsi and put the proceeds along with your own capital into the Apple stock (total of $1500). What is the expected return and standard deviation of this portfolo? Expected Return ]* Standard deviation c) Find the efficient portfolio E offering the same expected return as the portfolio in part b ("find" means specify the weights of the assets). What is the standard deviation of this portfolio? Weight Pepsi Welght Apple Weight Market Weight Risk.free Portfolio Std. Dev. d) Find the efficient portfolio Foffering the same standard deviation as the portfolio in part b ("find" means specity the weights of the assets). What is the expected return of this portfolio? Weight Market Weight Risk.free Welght Pepsi Welght Apple Pepsi % Apple b) Imagine you have $1000 cash to invest. You short-sell $500 worth of Pepsi and put the proceeds along with your own capital into the Apple stock (total of $1500). What is the expected return and standard deviation of this portfolio? Expected Return % Standard Deviation C) Find the efficient portfolio offering the same expected return as the portfolio in part b (-find" means specify the weights of the assets). What is the standard deviation of this portfolio? Welght Pepsi Welght Apple Weight Market Weight Riskfree Portfolio E Std. Dev. % d) Find the efficient portfolio Foffering the same standard deviation as the portfolio in part (find" means specify the weights of the assets). What is the expected return of this portfolio? Welght Pepsi Weight Apple Weight Market Weight Risk free Portfollo F Exp. Ret
