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Using the SML [LO4] Asset W has an expected return of 1.8 percent and a beta of 1.10. If the riskfree rate is 3.3 percent,
Using the SML [LO4] Asset W has an expected return of 1.8 percent and a beta of 1.10. If the riskfree rate is 3.3 percent, complete the following table for portfo- lios of Asset W and a risk-free asset. Illustrate the relationship between portfolio expected return and portfolio beta by plotting the expected returns against the betas What is the slope of the line that results? 17. Portfolio Portfolio Percentage of Beta Portfolio in Asset W Expected Return 0% 25 50 75 100 125 150 Reward-to-Risk Ratios LO4] In the previous problem, what would the risk-free rate have to be for the two stocks to be correctly priced? 19. Using the SML [LO4] Asset W has an expected return of 1.8 percent and a beta of 1.10. If the riskfree rate is 3.3 percent, complete the following table for portfo- lios of Asset W and a risk-free asset. Illustrate the relationship between portfolio expected return and portfolio beta by plotting the expected returns against the betas What is the slope of the line that results? 17. Portfolio Portfolio Percentage of Beta Portfolio in Asset W Expected Return 0% 25 50 75 100 125 150 Reward-to-Risk Ratios LO4] In the previous problem, what would the risk-free rate have to be for the two stocks to be correctly priced? 19
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