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Telecom Italia has a beta of 1.25 and an expected return of 14%. Assume that the return on an Italian risk-free asset is 2.1%. a)

Telecom Italia has a beta of 1.25 and an expected return of 14%. Assume that the return on an Italian risk-free asset is 2.1%. a) If a portfolio of the two assets has a beta of 0.93, what are the portfolio weights? b) If a portfolio of two assets has an expected return of 9%, what is its market risk premium? c) If you construct a different portfolio containing a different combination of the previous two assets that results in a Beta equal to 2.5, what are the portfolio weights? How do you interpret the weights for the two assets in this case?

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