The return on US T-Bills is 4% and the risk premium of the S&P 500 is 8%. If a portfolio is equally invested in two stocks with betas of .8 and 2.0, what is the expected return of the portfolio? O 15.2% O 14.8% O 12.8% O 13.6% O 14.2%

Q: What is the expected return of a portfolio with two stocks that has 450 shares of stock A, which has…

A: Step 1: Calculate the Total Value of Each StockFor Stock A:• Number of shares = 450• Price per share…

Q: The return on US T-Bills is 6%, inflation is 3% and the risk premium of the S&P 500 is 12%. If a…

A: The real rate of return can be calculated as per CAPM equation

Q: Suppose Autodesk stock has a beta of 2.30, whereas Costco stock has a beta of 0.68. If the risk-free…

A: Autodesk's beta=2.30 Autodesk's proportion in portfolio=60% Costco's proportion in portfolio=40%…

Q: Your portfolio has a beta of 1.18 and consists of 15 percent U.S. Treasury bills, 40 percent Stock…

A: Portfolio beta (PB) = 1.18 U.S. T bill beta (B1) = 0 (Since risk free) Stock A beta (B2) = 1 (Since…

Q: the risk free rate is 13% and the market risk premium rM rRF is 4% stock A has a beta of 12, and…

A: Required Rate of Return is the minimum acceptable return on investment sought by individuals or…

Q: A stock has an expected return of 10% and a beta of .9. If the risk-free rate is 4%, what is the…

A: The beta of the stock can be calculated as per the CAPM equation

Q: he risk-free rate is 8% and the expected return on a market portfolio is 13%. If a share has a beta…

A: Risk free rate = 8% Market return = 13% Stock beta = 1.20

Q: Suppose that the S&P 500, with a beta of 1.0, has an expected return of 12% and T-bills provide…

A: The objective of the question is to calculate the expected return and beta of portfolios constructed…

Q: Suppose you form a portfolio consisting of $31,000 invested in a mutual fund with beta of 1.6,…

A: Beta = 1.6Expected market risk premium = 6.3%Risk-free rate (Rf) = 0.8%According to Capital Asset…

Q: Suppose Intel stock has a beta of 0.73, whereas Boeing stock has a beta of 1.3. If the risk-free…

A: As per guidelines we are supposed to answer only 3 sup-parts Expected return on each stock is…

Q: The risk-free rate of return is 4.24 percent and the market risk premium is 9.5 percent. What is the…

A: To calculate the expected return we will use the below formula   Expected return = Risk free rate +…

Q: Currently, the risk free return is 5 percent and the expected market rate of return is 12 percent.…

A: The expected return of portfolio can be calculated with the help of CAPM equation. The beta in the…

Q: A stock has a risk premium of 7 percent and a beta of 1.4. If the risk-free rate is 2.2 percent.…

A: Following details are given to us in the question :Beta = 1.4Expected Return (ER) = ?Risk free rate…

Q: Suppose that the S&P 500, with a beta of 1.0, has an expected return of 13% and T-bills provide a…

A: Data given: Two types of assets: i) S&P 500 with expected return = 13% with a beta of 1.0 ii)…

Q: Finance Question

A: A certificate of deposit is an investment avenue that pays a fixed amount of interest at a…

Q: Suppose Intel stock has a beta of 0.87​, whereas Boeing stock has a beta of 2.08. If the​ risk-free…

A: 1. The expected return of Intel stock, calculated using the Capital Asset Pricing Model (CAPM),…

Q: Suppose Intel stock has a beta of 0.84, whereas Boeing stock has a beta of 1.29. If the risk-free…

A: As per guideline, if more than 3 sub parts asked in a question. I can solve only the first 3…

Q: The risk-free rate is 4% and the market risk premium is 5%. What is the required return on a…

A: Formulas: Portfolio beta = (Weight of stock A * Beat of stock A) + (Weight of stock B * Beat of…

Q: Consider a stock that has a Beta of 0.85. You expect the long-term return on the market to be 9.75%…

A: CAPM is also known as capital asset pricing model. It helps in know the expected return on the…

Q: The required rate of return on the Daisy Corporationʹs common stock is 11%, the current real rate of…

A: The expected return is the minimum required rate of return which an investor required from the…

Q: The risk-free rate is 2% and the expected return on a market portfolio is 6%. If a share has a beta…

A: As per CAPM Ri = Rf + B (Rm - Rf) Where Ri = Return on equity Rf = Risk free rate of return B = Beta…

Q: You are holding a portfolio with the following investments and betas: Stock Dollar investment Beta…

A: In the world of finance and investments a portfolio consists of different types of financial assets…

Q: Suppose Intel stock has a beta of 0.88, whereas Boeing stock has a beta of 1.18. If the risk-free…

A: CAPM stands for capital asset pricing model. This model describes the relationship between expected…

Q: An investor is forming a portfolio by investing $50,000 in stock A that has a beta of 1.50, and…

A: CAPM means capital asset pricing model used for calculating expected returns. It makes use of risk…

Q: Risk free rate is 3%, you predict market expected return to be 11%, beta for stock x is 1.25, beta…

A: Given information: Risk free rate is 3% Expected market return is 11% Beta of stock X is 1.25, Beta…

Q: a. What would be the expected return and beta of portfolios constructed from these two assets with…

A: Information Provided: Beta = 1.0 Expected return = 11% T-bill risk-free return = 6%   Expected…

Q: Compute the CAPM alpha of ABC. % Compute the volatility of the idiosyncratic component of return of…

A: The alpha indicates how well an investment performs in relation to expectations. An investment…

Q: Consider the CAPM. The expected return on the market is 18%. The expected return on a stock with a…

A: We are given following details : Expected return on market = 18% Beta = 1.2 Expected return on stock…

Q: Stock Y has an expected excess return of 10% and its beta is 1.25. The Market portfolio expected…

A: Alpha measures the excess return of an investment compared to what would be expected given its risk,…

Q: Bulldogs Co. has a collection of publicly traded stocks. The value of each security and its stock…

A: Answer) Calculation of Required Rate of Return of the Portfolio Required rate of return = Risk free…

Q: Company Y has a beta of 1.09. The risk-free rate of return is 3.18% and the market rate of return is…

A: β=1.09Rf =3.18%Rm=11.27%

Q: An investor is forming a portfolio by investing $8,000 in stock A which has a beta of 0.80, and…

A: Portfolio Beta is the weighted sum of the individual asset betas. Formula to calculate Portfolio…

Q: The stock of AlphaFish has a beta equal to 1.28. If U.S. T-bills return 5% and the market risk…

A: Following details are given to us in the question for AlphaFish  : Beta (B) = 1.28 U.S. T-bills…

Q: Bulldogs Co. has a collection of publicly traded stocks. The value of each security and its stock…

A: Total invested amount = 2,800,000 + 2,400,000 + 1,200,000 + 1,600,000 = 8,000,000 Portfolio beta =…

Q: The risk-free return is 4.43%, the inflation rate is 3.29%, and the expected return on the market is…

A:

Q: The beta of ABC is 1.2, the annual risk – free rate is 2.5%, and the annual expected return of the…

A: The Dividend Discount Model (DDM) provides a valuation approach based on the present value of…

Q: An investor is forming a portfolio by investing $50,000 in stock A which has a beta of 2.40, and…

A: Portfolio beta can be calculated by multiplying the the individual beta with its weight in…

Q: If the risk free rate is 4 9%, the expected return on the market portfolio is 1296 and the beta of…

A: Financial management consists of directing, planning, organizing and controlling of financial…

Q: You are holding a portfolio with the following investments and betas: Stock Dollar investment Beta А…

A: Market's required return  10%   Risk Free rate 3%   Stock  Dollar Investment Beta A  $…

Q: A stock has a beta of​ 1.3, and a market risk premium of​ 8%. The​ risk-free rate is​ 4%. What is…

A: The objective of this question is to calculate the expected return on a stock given its beta, the…

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.