?(Portfolio beta and? CAPM)You are putting together a portfolio made up of four different stocks. ? However, you are considering two possible? weightings: 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 were7 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 first portfolio because the beta is smaller.

B. The second portfolio because the beta is larger.

C. The second portfolio because the beta is smaller.

D. The first portfolio because the beta is larger.

c.??If the? risk-free rate of interest were 3.5?% and the market risk premium were 7?%, then the rate of return on the first portfolio is expected to be ________. ?(Round to two decimal? places.)

If the? risk-free rate of interest were 3.5?% and the market risk premium were 7?%, then the rate of return on the second portfolio is expected to be ____Round to two decimal? places.)

Data Table Asset Beta 2.40 1.05 0.60 1.60 Portfolio Weightings First Portfolio Second Portfolio 12% 38% 38% 12% 38% 12% 38% 12% Print Done