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What would be the expected return and beta

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Reference no: EM133028690

Question - Suppose that the S&P 500, with a beta of 1.0, has an expected return of 12% and T-bills provide a risk-free return of 4%.

Required -

a. What would be the expected return and beta of portfolios constructed from these two assets with weights in the S&P 500 of (i) 0; (ii) 0.25; (iii) 0.50; (iv) 0.75; (v) 1.0?

b. How does expected return vary with beta?

Reference no: EM133028690

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