(Solution Download) A stock has a beta of 1.35 and an expected return of 16%. A risk-free asset currently earns 4.8%. 1.


A stock has a beta of 1.35 and an expected return of 16%. A risk-free asset currently earns 4.8%. 1. What is the expected return on a portfolio that is equally invested in the two assets? 2. If a portfolio of the two assets has a beta of 0.95, what are the portfolio weights? 3. If a portfolio of the two assets as an expected return of 8%, what is its beta? 4. If a portfolio of the two assets has a beta of 2.70, what are the portfolio weights? How do you interpret the weights for the two assets in this case? Explain.

 







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