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Use the information to answer the following questions. An investor is forming a portfolio by investing $50,000 in stock A that has a beta of
Use the information to answer the following questions. An investor is forming a portfolio by investing $50,000 in stock A that has a beta of 1.50, and $25,000 in stock B that has a beta of 0.90. The return on the market is equal to 6% and Treasury bonds have a yield of 4%. What is the weight on stock A? Select one: a. 0.6667 b. 0.3333 C. 0.25 d. 0.5 0.0.9 Continued from previous question. What is the portfolio beta? Select one: a 24 b. 1.1 c. 1.3 d. 1.2 0 0 e. 0.8 Continued from previous question. What is the required rate of return on the investor's portfolio? Select one: a. 5.8% b. 6.8% c. 7.5% d. 6.6% e. 7.0% Continued from previous question. Assume the predicted rate of return (expected rate of return) for Portfolio AB is 10%. Compare the required rate of return with the predicted rate of return of Portfolio AB, which of the following statements is most correct? Select one: a. The portfolio is a good buy. b. The portfolio is experiencing supernormal growth. c. The portfolio should be sold. d. The portfolio has a smaller expected return than average stocks. e. The portfolio is not paying dividends
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