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?
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?
Related questions
Problem 11-17 Using CAPM [LO 4]
| A stock has a beta of 1.21 and an expected return of 11.9 percent. A risk-free asset currently earns 3.85 percent. |
| Required: | |
| (a) | What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) |
| Expected return | % |
| (b) | If a portfolio of the two assets has a beta of 0.81, what are the portfolio weights? (Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).) |
| Weight of the stock | |
| Weight of the risk-free asset |
| (c) | If a portfolio of the two assets has an expected return of 11.1 percent, what is its beta? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) |
| Beta |
| (d) | If a portfolio of the two assets has a beta of 2.41, what are the portfolio weights? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).) |
| Weight of the stock | |
| Weight of the risk-free asset | |
| 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 1.30 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 | |
