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Suppose MegaChip has a beta of 1.5, whereas Littlewing stock has a beta of .85. If the risk-free interest rate is 3.5% and the expected

Suppose MegaChip has a beta of 1.5, whereas Littlewing stock has a beta of .85. If the risk-free interest rate is 3.5% and the expected return of the market portfolio is 12% according to CAPM.

a. What is the expected return of MegaChip stock?

b. What is the expected return of Littlewing stock?

c. What is the beta of a portfolio of 55% MegaChip and 45% Littlewing stock?

d. What is the expected return of a portfolio of 55% MegaChip and 45% Littlewing stock?

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