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A stock has a beta of 1.25 and an expected return of 14%. A risk free asset currently earns 2.1%.

1) What is the expected return on a portfolio that is equally invested in two assets?
2) If a portfolio of the two assets has a beta of .93 what are the portfolio weights?
3) If a portfolio of the two assets has an expected return of 9% what is the beta?
4) If a portfolio of the two assets has a beta of 2.50, what are the portfolio weights? How do you interpret the weights for the two assets in this case?

 

Basic Finance, Finance

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