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Please note this is all one question A stock has a beta of 1.33 and an expected return of 13.1 percent. A risk-free asset currently earns 4.45 percent. Required:

(a) What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Expected return %

(b) If a portfolio of the two assets has a beta of 0.93, what are the portfolio weights? (Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).) Weight of the stock ______ Weight of the risk-free asset ____

(c) If a portfolio of the two assets has an expected return of 12.3 percent, what is its beta? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Beta ________

d. If a portfolio of the two assets has a beta of 2.53, what are the portfolio weights? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).) Weight of the stock ______ Weight of the risk-free asset____

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M91600440

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