What would be the expected return and beta of portfolios

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Suppose that the S&P 500, with a beta of 1.0, has an expected return of 16% and T-bills provide a risk-free return of 3%

Question 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

Question b. How does expected return vary with beta? (Do not round intermediate calculations.)

Reference no: EM132565812

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