a. What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. 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 4 decimal places, e.g., 1616.) c. If a portfolio of the two assets has an expected return of 12.9 percent, what is its beta? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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A stock has a beta of 1.39 and an expected return of 13.7 percent. A risk-free asset
currently earns 4.75 percent.
a. What is the expected return on a portfolio that is equally invested in the two assets?
(Do not round intermediate calculations and enter your answer as a percent
rounded to 2 decimal places, e.g., 32.16.)
b. 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 4 decimal places,
e.g., 1616.)
c. If a portfolio of the two assets has an expected return of 12.9 percent, what is its beta?
(Do not round intermediate calculations and round your answer to 2 decimal
places, e.g., 32.16.)
d. If a portfolio of the two assets has a beta of 2.59, what are the portfolio weights? (A
negative answer should be indicated by a minus sign. Do not round intermediate
calculations and round your answers to 4 decimal places, e.g., 1616.)
a. Expected return
b. Weight of stock
Weight of risk-free asset
%
c. Beta
d. Weight of stock
Weight of risk-free
Transcribed Image Text:A stock has a beta of 1.39 and an expected return of 13.7 percent. A risk-free asset currently earns 4.75 percent. a. What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. 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 4 decimal places, e.g., 1616.) c. If a portfolio of the two assets has an expected return of 12.9 percent, what is its beta? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. If a portfolio of the two assets has a beta of 2.59, what are the portfolio weights? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 1616.) a. Expected return b. Weight of stock Weight of risk-free asset % c. Beta d. Weight of stock Weight of risk-free
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