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Suppose that the S&P 500, with a beta of 1.0, has an expected return of 13% and T-bills provide a risk-free return of 4%. a.
Suppose that the S&P 500, with a beta of 1.0, has an expected return of 13% and T-bills provide a risk-free return of 4%. a. What would be the expected return and beta of portfolios constructed from these two assets with weights in the S&P 500 of (i) 0; (ii) .25; (iii) .50; (iv) .75, (v) 1.0? (Leave no cells blank-be certain to enter "0" wherever required. Do not round intermediate calculations. Round your answers to 2 decimal places.) b. How does expected return vary with beta? (Do not round intermediate calculations.) The expected return by for a one unit increase in beta
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