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I need some help, please. My question is... A friend says that she expects to earn 12.00% on her portfolio with a beta of 2.25.
I need some help, please. My question is...
A friend says that she expects to earn 12.00% on her portfolio with a beta of 2.25. You have a two-asset portfolio including stock X and a risk-free security. The expected return of stock X is 11.50% and the beta is 1.75. The expected return on the risk free security is 2.50%. If you consturct your portfolio so that its beta is equal to the beta on your friends portfolio, then what is the expected return of your portfolio?
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