Using CAPM

A stock has a beta of 1.20 and an expected return of 14 percent. A risk-free asset currently earns 3 percent.

a.	What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))

Expected return

%

b.	If a portfolio of the two assets has a beta of .72, what are the portfolio weights? (Do not round intermediate calculations and round your answers to 4 decimal places. (e.g., 32.1616))

Weight of stock
Risk-free weight

c.	If a portfolio of the two assets has an expected return of 10 percent, what is its beta? (Do not round intermediate calculations and round your answer to 3 decimal places. (e.g., 32.161))

Beta

d.	If a portfolio of the two assets has a beta of 2.40, what are the portfolio weights? (Do not round intermediate calculations and negative amount should be indicated by a minus sign.)

Weight of stock
Risk-free weight