Question
two risky portfolios exist for investing; one is a bond portfolio with a beta of 0.8 and an expeted return of 8.3%, and the other
two risky portfolios exist for investing; one is a bond portfolio with a beta of 0.8 and an expeted return of 8.3%, and the other is an equity portfolio with a beta of 1.2 and an expected return of 15.9%. If these portfolios are the only two available assets for investing, what combination of these two assets will give the following investors their desired level of expected return? What is the beta of each investor's combined bond and equity portfolio?
Bart: desired expected return 15%
Lisa: desired expected return 13%
Maggie: desired expected return 11%
a) The combination of these two assets that will give Bart an expected return of 15% is ____% in bonds and ____% in stocks.
b) With this combination of the bond and equity portfolio, Bart will have a portfolio beta of _____
c) The combination of these two assets that will give Lisa an expected return of 13% is _____% in bonds and ____% in stocks
d) With this combination of the bond and equity portfolio, Lisa will have a portfolio beta of ____
e) The combination of these two assets that will give Maggie an expected return of 11% is _____% in bonds and ____% in stocks
f) With this combination of the bond and equity portfolio, Maggie will have a portfolio beta of ____
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