Question
Two risky portfolios exist forinvesting: one is a bond portfolio with a beta of 0.7 and an expected return of 8.5 %, and the other
Two risky portfolios exist forinvesting: one is a bond portfolio with a beta of 0.7 and an expected return of 8.5%, and the other is an equity portfolio with a beta of 1.3 and an expected return of 16.1%. If these portfolios are the only two available assets forinvesting, what combination of these two assets will give the following investors their desired level of expectedreturn? What is the beta of eachinvestor's combined bond and equityportfolio?
a.Bart: desired expected return 15%
b.Lisa: desired expected return 13%
c.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.(Round both answers to two decimalplaces.)
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