Question
Different investor weights. Two risky portfolios exist for investing: one is a bond portfolio with a beta of 0.7 and an expected return of 8.8%,
Different investor weights. Two risky portfolios exist for investing: one is a bond portfolio with a beta of 0.7
and an expected return of 8.8%, and the other is an equity portfolio with a beta of 1.3 and an expected return of 16.4%. 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 15%
b.Lisa: desired expected return 13%
c.Maggie: desired expected return 11%
a.The combination of these two assets that will give Bart an expected return of 15%
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