A stock has a beta of 1.13 and an expected return of 12.1%. A risk...
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Accounting
A stock has a beta of 1.13 and an expected return of 12.1%. A risk free asset currently earns 5%.
a) What is the expected return on a portfolio that is equally invested in the two assets?
b) If a portfolio of the two assets has a beta of .5, what are the portfolio weights?
c) If a portfolio of the two assets has an expected return of 10%, what is its beta?
d) If a portfolio of the two assets has a beta of 2.26. What are the portfolio weights? How do you interpret the weights for the two assets in this case? Explain.
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