Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text: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
%
%
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