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Suppose Intel stock has a beta of 0.76, whereas Boeing stock has a beta of 1.28. If the risk-free interest rate is 6.1% and
Suppose Intel stock has a beta of 0.76, whereas Boeing stock has a beta of 1.28. If the risk-free interest rate is 6.1% and the expected return of the market portfolio is 13.6%, 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 60% Intel stock and 40% Boeing stock? d. What is the expected return of a portfolio that consists of 60% Intel stock and 40% Boeing stock? (There are two ways to solve this.) Review Only Click the icon to see the Worked Solution (Formula Solution). a. What is the expected return of Intel stock? Intel's expected return is 11.8%. (Round to one decimal place.) b. What is the expected return of Boeing stock? Boeing's expected return is 15.7 %. (Round to one decimal place.) c. What is the beta of a portfolio that consists of 60% Intel stock and 40% Boeing stock? The portfolio beta is 0.97". (Round to two decimal places.) d. What is the expected return of a portfolio that consists of 60% Intel stock and 40% Boeing stock? (There are two ways to solve this.) The expected return of the portfolio is 13.4 %. (Round to one decimal place.)
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