Using capm a stock has a beta of 110 and an expected return, Ask an Expert

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Using CAPM A stock has a beta of 1.10 and an expected return of 12 percent. A risk-free asset currently earns 2.6 percent.

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

b. If a portfolio of the two assets has a beta of .77, what are the portfolio weights? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.) Weight of stock ? Risk-free weight?

c. If a portfolio of the two assets has an expected return of 9 percent, what is its beta? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) Beta d. If a portfolio of the two assets has a beta of 2.20, what are the portfolio weights? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations.) Weight of stock ? Risk-free weight?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91779039

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