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Suppose we want to build a portfolio of Tesla and Amazon. After some analysis we determine that Tesla = 0.80 and Amazon = 1.40.

  1. Suppose we want to build a portfolio of Tesla and Amazon. After some analysis we determine that βTesla = 0.80 and βAmazon = 1.40. We've also determined that the appropriate risk-free rate is 2% and the market risk premium is 6%. A portfolio of 25% Tesla and 75% Amazon, what will be the portfolio beta and expected return?

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