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() Stock A has a beta of 1.12 and an expected return of 10.8%. A risk-free asset currently earns 2.7%. You are considering a portfolio

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() Stock A has a beta of 1.12 and an expected return of 10.8%. A risk-free asset currently earns 2.7%. You are considering a portfolio of only Stock A and risk-free asset. (1) What must the expected return on the market be? (2 marks) (ii) What is the expected return on a portfolio that includes 30% invested in Stock A and the rest in the risk-free asset? (3 marks) (iii) If a portfolio with Stock A and risk-free asset now has an expected return of 10%, compute the weighing of Stock A in the portfolio and the portfolio beta. (4 marks)

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