A stock has a beta of 0.9 and an expected return of 9 percent. A risk-free asset currently earns 4 percent.a. What is the expected return on a portfolio that is equally invested in the two assets?Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.Answer is complete and correct.Expected return6.50%b. If a portfolio of the two assets has a beta of 0.5, what are the portfolio weights?Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.StockRisk-free assetPortfolio Weight%%

Step 1:(a). The return of a portfolio is the weighted average return of the securities which…

Answered: A stock has a beta of 0.9 and an…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 6P

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