Question
Different investor weights. Two risky portfolios exist for investing: one is a bond portfolio with a beta of 0.6 and an expected return of 6.5%,
Different investor
weights.
Two risky portfolios exist for investing: one is a bond portfolio with a beta of
0.6
and an expected return of
6.5%,
and the other is an equity portfolio with a beta of
1.4
and an expected return of
15.3%.
If these portfolios are the only two available assets for investing, what combination of these two assets will give the following investors their desired level of expected return? What is the beta of each investor's combined bond and equity portfolio?a.Bart: desired expected return
14%
b.Lisa: desired expected return
12%
c.Maggie: desired expected return
10%
a.The combination of these two assets will give Bart an expected return of
14%
is
in bonds and
in stocks.(Round both answers to two decimal places.)
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