Question 7

A stock has a beta of 1.5, an expected return of 15%, and lies on the security market line. A risk-free asset is yielding 3%. You want to create a $10,000 portfolio consisting of Stock A and the risk-free security such that the portfolio beta is .75. What rate of return should you expect to earn on your portfolio?

Group of answer choices

8 percent

9 percent

10 percent

11 percent

12 percent