What is expected return on portfolio

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Reference no: EM132055568

Using CAPM

A stock has a beta of 1.05 and an expected return of 11 percent. A risk-free asset currently earns 2.4 percent.

a. What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations and 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 .63, what are the portfolio weights? (Do not round intermediate calculations and 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 7 percent, what is its beta? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)

Beta

d. If a portfolio of the two assets has a beta of 2.10, what are the portfolio weights? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations.)

Weight of stock

Risk-free weight

Reference no: EM132055568

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