Calculating portfolio betas

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1. Calculating Portfolio Betas

You own a portfolio equally invested in a riskfree asset and two stocks. If one of the stocks has a beta of 0.95 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio?

a.2.05

b.1.10

c.1.05

d.1.95

e.2.15

2. Using CAPM

A stock has a beta of 1.3, the expected return on the market is 15 percent, and the risk-free rate is 9 percent. What must the expected return on this stock be?

a.17.47%

b.28.5%

c.15.96%

d.16.8%

e.17.64%

Reference no: EM131916268

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