A stock has a beta of 1.40 and an expected return of 12 percent. A risk-free asset currently earns 3.8 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 0.91, 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 8 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 2.80, what are the portfolio weights? (Negative amount should be indicated by a minus sign.)
Weight of stock Risk-free weight
| A stock has a beta of 1.40 and an expected return of 12 percent. A risk-free asset currently earns 3.8 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 0.91, 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 8 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 2.80, what are the portfolio weights? (Negative amount should be indicated by a minus sign.) |
| Weight of stock | |
| Risk-free weight | |
Related questions
| A stock has a beta of 1.30 and an expected return of 10 percent. A risk-free asset currently earns 3.4 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 1.04, 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 8 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 2.60, what are the portfolio weights? (Negative amount should be indicated by a minus sign.) |
| Weight of stock | |
| Risk-free weight | |
