What is the expected return on portfolio

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A stock has a beta of 1.75 and an expected return of 12 percent. A risk-free asset currently earns 3.0 percent.

a. What is the expected return on a portfolio that is equally invested in the two assets? (Round your answer to 2 decimal places. (e.g., 32.16))

Expected return %

b. If a portfolio of the two assets has a beta of 0.98, what are the portfolio weights? (Round your answer 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 9 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 3.50, what are the portfolio weights? (Negative amount should be indicated by a minus sign.)

Weight of stock

Risk-free weight

Reference no: EM132003331

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