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Please show work/equations. Risk and Return Porfolio Weights and the Security Market Line Do not round any calculations From the Topic Application of the SMLpp.

image text in transcribed Please show work/equations.

Risk and Return Porfolio Weights and the Security Market Line Do not round any calculations From the Topic "Application of the SML"pp. 240-242 An investor wants to build a 2-stock portfolio of the following stocks: Stock Beta 1.3 0.85 Expected Return 7.80% 5.80% 14 If the investor wants the Portfolio Beta to be 1.1, what should the weights of each stock be in the portfolio? 16 sub-calc area Desired Portfolio beta: Weight of Stock A: Weight of Stock B: Based on your answer to part a, what would the Expected Return of the Portfolio be? Portfolio Expected Return: Using the same stock information, what would the Market Risk Premium (MRP) and Risk-Free Rate (Rf) be? Market Risk Premium: Risk-Free Rate

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