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Suppose Intel stock has a beta of 0.75, whereas Boeing stock has a beta of 1.27. If the risk-free interest rate is 5.5% and the
Suppose Intel stock has a beta of 0.75, whereas Boeing stock has a beta of 1.27. If the risk-free interest rate is 5.5% and the expected return of the market portfolio is 12.6%, according to the CAPM,
a. What is the expected return of Intel stock?
b. What is the expected return of Boeing stock?
c. What is the beta of a portfolio that consists of 55% Intel stock and 45% Boeing stock?
d. What is the expected return of a portfolio that consists of 55% Intel stock and 45% Boeing stock? (There are two ways to solve this.)
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