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You bought one of Ewha Corp's 12 percent coupon bonds one year ago for $1,100. These bonds make annual payments and mature six years from
You bought one of Ewha Corp's 12 percent coupon bonds one year ago for $1,100. These bonds make annual payments and mature six years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 8 percent. If the inflation rate was 4.2 percent over the past year, what was your total real return on investment? a. A stock has a beta of 1.20 and an expected return of 20 percent. The risk-free asset currently earns 3.2 percent. What is the expected return on a portfolio that is equally invested in the two assets? b. If a portfolio of the two assets has a beta of 0.80, what is the portfolio weight of the risk-free asset? If a portfolio of the two assets has an expected return of 8 percent, what is its beta? d. If a portfolio of the two assets has a beta of 2.40, what is the portfolio weight of the risk-free asset? c
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