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What is die expected return of a portfolio of two risky assets? (b) What is the Risk of this portfolio? (c) Draw the graph showing
What is die expected return of a portfolio of two risky assets? (b) What is the Risk of this portfolio? (c) Draw the graph showing the portfolio risk and return; (a) IBM stock a beta of the stock is 1.25. The 3-month t-bill rate is 2% and the return on the S&P 500 Index is 10%. According to the CAPM what is the required rate of return of IBM Stock? What is the risk premium of IBM stock? What is the risk premium of S&P 500 index? (b) Draw Security Market Line (SML) for IBM Share and show the risk premiums of IBM and S&P 500
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