What are the beta and the expected return of jar jar

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Problem 1: Jar Jar forms an aggressive growth portfolio by investing 23% of his savings in GM stock, 22% in Nissan stock, 21% in Subaru stock, 10% in an index fund, and the last 24% is allocated on a bond fund. Assume for simplicity that the index fund is a good proxy to the market portfolio and has a beta equal to 1, whereas the bond fund is a good proxy to the riskless asset. The beta of GM stock is 1.18, the beta of Nissan is 1.57, and the beta of Subaru is 1.85. If the expected return of the market index is 11% and the risk-free asset yields 5%, what are the beta and the expected return of Jar Jar's portfolio? Give your answer rounded to two decimal places.

Reference no: EM132928035

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