What should be the expected return on a security

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a. Securities A,B and C have betas of 0.7,1.0 and X, respectively. An equally weighted portfolio of the 3 securities, has a beta of 1.1. If A is replaced by another security with a beta of 1.2, what will be the beta of the new portfolio?

b. Given a risk-free rate of 5% and a S&P 500 Index return of 12%, what should be the expected return on a security with a beta of 0.7?

Reference no: EM131881784

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