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UPS has a beta of 1.5 and FedEx has a beta of 0.9. The risk-free rate is 4% and the market risk premium is 7%.
UPS has a beta of 1.5 and FedEx has a beta of 0.9. The risk-free rate is 4% and the market risk premium is 7%. If the portfolio comprised of these two stocks has a beta equal to 1.08, what are the portfolio weights of UPS and FedEx? Solution: The of the portfolio is the weighted sum of its constituents, thus P ort. =
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