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Joe wants a portfolio with a beta of 1.2. He currently has two stocks in his portfolio. Stock X with a beta of 1.5 and
Joe wants a portfolio with a beta of 1.2. He currently has two stocks in his portfolio. Stock X with a beta of 1.5 and Stock Y with a beta of 0.8. If the risk-free rate is 2% and the market return is 8%, what will his portfolios expected return be and how should he allocate his money among the two stocks?
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