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A stock has a beta of 1.95 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? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Expected return %
b. If a portfolio of the two assets has a beta of .78, what are the portfolio weights? (Do not round intermediate calculations. Round your answers 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. Round your answer to 3 decimal places, e.g., 32.161.)
Beta
d. If a portfolio of the two assets has a beta of 3.90, what are the portfolio weights? (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Enter your answers as a whole number.)
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