(Portfolia Beta and CAPM) You are putting together a portfolio made up of four different stocks. However, you are considering two possible weightings:

		Portfolio Weightings
Asset	Beta	First Portfolio	Second Portfolio
A	2	12%	38%
B	0.95	12%	38%
C	0.45	38%	12%
D	-1.7	38%	12%

a.What is the beta on each portfolio? b.Which portfolio is riskier? c.If the risk-free rate of interest were 3.5 percent and the market risk premium were 5.5 percent, what rate of return would you expect to earn from each of the portfolios?

a. The beta on the first portfolio is ____(Round to three decimal places.)

The beta on the second portfolio is _____ (Round to three decimal places.)

b.Which portfolio is riskier?(Select the best choice below.)

A. The second portfolio because the beta is smaller.

B. The first portfolio because the beta is larger.

C. The second portfolio because the beta is larger.

D. The first portfolio because the beta is smaller.

c. If the risk-free rate of interest were 3.5% and the market risk premium were 5.5%, then the rate of return on the first portfolio is expected to be _________%.(Round to two decimalplaces.)

If the risk-free rate of interest were 3.5% and the market risk premium were 5.5%, then the rate of return on the second portfolio is expected to be _______%. (Round to two decimalplaces.)