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A friend says that she expects to earn 13.00% on her portfolio with a beta of 1.50. You have two-asset portfolio including stock X and a risk-free security. The expected return on stock X is 11.00% and the beta is 1.20. The expected return on the risk-free security is 3.00%. You construct a portfolio to match your friend's return. What is the beta of your portfolio? The beta of your portfolio is.xxxx round to two decimal places.

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Lelia Lubowitz
Lelia LubowitzLv2
28 Sep 2019
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A friend says that she expects to earn 13.00% on her protfolio with a beta of 2.25. You have a two-asset portfolio including stock x and a risk-free security. The expecgted return of stock x is 10.00% and the beta is 1.60. The expected return on the risk-free security is 3.50%. If you construct your portfolio so that its beta is equal to the beta on your friend's portfolio, then what is the expected return of your portfolio?

Suppose a risk-free security pays a 8% return, and a market portfolio has an expected return of 9%.

What is the expected return on a portfolio that has $6,000.00 invested in the risk-free security and $4,000.00 invested in the market portfolio? Round your answer to one decimal place.

What is the CAPM beta of the portfolio? Round your answer to two decimal places.

Does the CAPM beta correspond to the portfolio weight invested in the market portfolio?
Yes or No?

A stock has a beta of 1.20 and an expected return of 14 percent. A risk-free asset currently earns 3.0 percent.

a. What is the expected return on a portfolio that is equally invested in the two assets? (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 0.72, what are the portfolio weights? (Round your answer 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? (Negative amount should be indicated by a minus sign.)

Weight of stock= ?

Risk-free weight=?

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