Question 1: Combining portfolios [6pt) An investor has a choice of three portfolios with the following expected returns and betas: Portfolio Expected Return Beta Portfolio 1 12% Portfolio 2 16% Portfolio 3 20% Use the above information to answer the following questions. (a) (pt) If the investor combines portfolios 1 and 2 to give the same expected return as portfolio 3, what is the beta of the combined portfolio? Is it higher or lower than the beta of portfolio 3? 0.5 1.1 2 (b) (pt) If the investor combines portfolios 1 and 2 to have the same beta as portfolio 3, what is the expected return of the combined portfolio? Is it higher or lower than the expected return of portfolio 3? Question 1: Combining portfolios [6pt) An investor has a choice of three portfolios with the following expected returns and betas: Portfolio Expected Return Beta Portfolio 1 12% Portfolio 2 16% Portfolio 3 20% Use the above information to answer the following questions. (a) (pt) If the investor combines portfolios 1 and 2 to give the same expected return as portfolio 3, what is the beta of the combined portfolio? Is it higher or lower than the beta of portfolio 3? 0.5 1.1 2 (b) (pt) If the investor combines portfolios 1 and 2 to have the same beta as portfolio 3, what is the expected return of the combined portfolio? Is it higher or lower than the expected return of portfolio 3