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Suppose Intel stock has a beta of 1.7?, whereas Boeing stock has a beta of 0.91....

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Finance

Suppose Intel stock has a beta of 1.7?, whereas Boeing stock hasa beta of 0.91. If the? risk-free interest rate is 5.9% and theexpected return of the market portfolio is 12.5%?, according tothe? CAPM,

a. What is the expected return of Intel?stock?

b. What is the expected return of Boeing?stock?

c. What is the beta of a portfolio thatconsists of 60% Intel stock and 40% Boeing? stock?

d. What is the expected return of a portfoliothat consists of 60% Intel stock and 40% Boeing? stock?

Answer & Explanation Solved by verified expert
3.9 Ratings (697 Votes)
As per Capital Asset Pricing Model CAPM the Expected rate of return for the stock is calculated by using the following equation Expected rate of return Riskfree Rate BetaMarket Rate of    See Answer
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Transcribed Image Text

Suppose Intel stock has a beta of 1.7?, whereas Boeing stock hasa beta of 0.91. If the? risk-free interest rate is 5.9% and theexpected return of the market portfolio is 12.5%?, according tothe? CAPM,a. What is the expected return of Intel?stock?b. What is the expected return of Boeing?stock?c. What is the beta of a portfolio thatconsists of 60% Intel stock and 40% Boeing? stock?d. What is the expected return of a portfoliothat consists of 60% Intel stock and 40% Boeing? stock?

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