A stock has a beta of 1.2 and an expected return of 14 percent. A risk-free asset currently earns 3.8 percent.a. What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations. Enteryour answer as a percent rounded to 2 decimal places.)Expected return%b. If a portfolio of the two assets has a beta of 0.20, what are the portfolio weights? (Do not round intermediate calculations. Enteryour answers as a percent rounded to 2 decimal places.)StockRisk-free assetPortfolio Weight%%c. If a portfolio of the two assets has an expected return of 12.50 percent, what is its beta? (Do not round intermediate calculations.Round your answer to 4 decimal places.)Beta

Given information:A stock has a beta of 1.2 and an expected return of 14 percent. A risk-free asset…

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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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If a given stock in the portfolio had established 1.23 beta; the related expected return is at 11.7percent, and 3.5percent is the current earning of a risk-free asset; a. Determine 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 0.7, what are the portfolio weights? c. If a portfolio of the two assets has an expected return of 9%, what is its beta? d. If a portfolio of the two assets has a beta of 2.46, what are the portfolio weights? How do you interpret the weights for the two assets in this case? Discuss.
An Equity has a beta of 0.9 and an expected return of 9%. A risk free asset currently earns 2%. i.) What is the expected return on a portfolio that is equally invested in two assets? ii.) If a portfolio of the two assets has an expected return of 6%, what is its beta? iii.) If a portfolio of the two assets has a beta of 1.5, what is its weight ? Iv.) If a portfolio of the two assets has a beta of 1.5, what are the portfolio weights? How do you interpret the weights for the two assets in this case? Explain.
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 return 6.50 % 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. Stock Risk-free asset Portfolio Weight % %
kindly be as detailed as possible with the calculations. Preferably in excel.
Start with A-C and I will submit seperately for D! Thank you :)
If a portfolio of the two assets has a beta of .99, what are the portfolio weights? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Weight of stock Risk-free weight
Parts A-C have already been answered, looking for answer D.
If you plot the relationship between portfolio expected return and portfolio beta, what is the slope of the line that results? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) | Slope of the line %
Asset W has an expected return of 8.8 percent and a beta of .90. If the risk-free rate is 2.6 percent, complete the following table for portfolios of Asset W and a risk-free asset. (Do not round intermediate calculations. Enter your expected returns as a percent rounded to 2 decimal places, e.g., 32.16, and your beta answers to 3 decimal places, e.g., 32.161.) Percentage of Portfolio in Portfolio Expected Portfolio Asset W Return Beta 0 % % 25 % 50 % 75 % 100 % 125 % 150 % If you plot the relationship between portfolio expected return and portfolio beta, what is the slope of the line that results? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Slope of the line %
Asset W has an expected return of 8.8 percent and a beta of .9O. If the risk-free rate is 2.6 percent, complete the following table for portfolios of Asset W and a risk-free asset. (Do not round intermediate calculations. Enter your expected returns as a percent rounded to 2 decimal places, e.g., 32.16, and your beta answers to 3 decimal places, e.g., 32.161.) Answer is complete and correct. Percentage of Portfolio in Asset W Portfolio Expected Portfolio Return Beta % 2.60 % 25 4.15 % 0.225 50 5.70 % 0.450 75 7.25 % 0.680 100 8.80 % 0.900 125 10.35 % 1.130 150 11.90 % 1.350 you plot the relationship between portfolio expected return and portfolio beta, what is the slope of the line that results? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) If X Answer is not complete. Slope of the line
Suppose Stock A has B = 1 and an expected return of 11%. Stock B has a B = 1.5. The risk- free rate is 5%. Also consider that the covariance between B and the market is 0.135. Assume the CAPM is true. Answer the following questions: a) Calculate the expected return on share B. b) Find the equation of the Capital Market Line (CML). c) Build a portfolio Q with B = 0 using actions A and B. Indicate weights (interpret your result) and expected return of portfolio Q.
Equity has a beta of 1.35 and an expected return of 16 percent. A risk-free asset currently earns 4.8 percent. (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 0.95, what are the portfolio weights? (c) If a portfolio of the two assets has an expected return of 8 percent, what is its beta? (d) 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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