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You are given the expected returns and standard deviations of L'Oreal and Daimler AG, the Euro Stoxx 50 Index of largest Eurozone firms, and the
You are given the expected returns and standard deviations of L'Oreal and Daimler AG, the Euro Stoxx 50 Index of largest Eurozone firms, and the risk free asset. Asset Expected Return Standard Deviation L'Oreal 16% 30% Daimler 12% 25% Euro Stoxx 50 13% 12% Risk Free Asset 3% 0% Assuming that the returns are explained by the capital asset pricing model; a) calculate the betas of L'Oreal and Daimler. b) calculate the risk of a portfolio holding L'Oreal and Daimler with an expected return the same as the Euro Stoxx 50 Index return
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