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Calculation of portfolio return and beta and risk involved

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Calculation of Portfolio Return, Beta and risk involved

Risk & Return

A stock has beta of 1.5 and an expected return of 11%. A risk free asset earns 2%.

(a) 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 0.9 what are the portfolio weights?

(c) If a portfolio of the two assets has an expected return of 9%, what is the beta?

(d) If a portfolio of the two assets has a beta of 1.80, what are the portfolio weights? How do you interpret the weights for the two assets in this case? Explain.

Reference no: EM1316602

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