Is there any combination of the treasury bill and stock c

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Reference no: EM13498619

1. What will be the expected return and beta for each of the following portfolios?

a) Portfolios 1 through 4: All of the funds are invested solely in one asset (the corresponding three stocks or the Treasury bill).
b) Portfolio 5: One-quarter of the funds are invested in each alternative.
c) Portfolio 6: One-half of the funds are invested in stock A and one-half in stock C.
d) Portfolio 7: One-third of the funds are invested in each stock.

2. Are any of the portfolios inefficient?

3. Is there any combination of the Treasury bill and stock C that is superior to portfolio 6 (i.e., half the funds in stock A and half in stock C)?

4. Since your clients suggested stock has an anticipated return of 12 percent and a beta of 1.4, does that information argue for or against the purchase of the stock?

5. Why is it important to consider purchasing an asset as part of a portfolio and not as an independent act?

Reference no: EM13498619

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