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17) Suppose we want to build a portfolio of Tesla and Amazon. After some analysis we determine that BTesla = 0.80 and Bamazon = 1.40.
17) Suppose we want to build a portfolio of Tesla and Amazon. After some analysis we determine that BTesla = 0.80 and Bamazon = 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, will have portfolio beta and an expected return of: A) Portfolio beta = 1.10; Expected Return = 8.60% B) Portfolio beta = 1.25; Expected Return = 9.50% C) Portfolio beta = 1.30; Expected Return = 9.80% D) Portfolio beta = 1.40; Expected Return = 11.20% E) None of the above
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