Identify two investment alternatives that can be combined in a portfolio. Assume a 5050 investment allocation in each investment alternative   b) Compute the expected return of the portfolio thus formed  c) Compute the portfolio’s beta. Is the portfolio aggressive or defensive?

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
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Hi goodmorning can you answer question 3 please it's a continuation from the questions from the image.

From the information generated in the previous two questions;

a) Identify two investment alternatives that can be combined in a portfolio. Assume a 5050 investment allocation in each investment alternative  

b) Compute the expected return of the portfolio thus formed 

c) Compute the portfolio’s beta. Is the portfolio aggressive or defensive?

Consider the following information about the various states of economy and the returns of
varius investment aleatives for each scena. Answer the questions do lok
State of the Economy
Recond
Below Age
Average
Above Average
Beem
Mean
Standard Devation
Coefficient Vari
Covariance with MP
Colation with Market Index
Beta
CAPM Reg. Return
Vakers
(Ovenaked Undeaked Faily
Valed
Nature of stock
AggyDefa)
Probability
az
0.1
0.3
0.3
01
%. Return on T-Bills, Stocks and Market
Index
Market
T-
Bill
7
2
7
7
7
Phillips
20
35
50
Pay Rubber
117
made
10
-10
7
45
30
14.7
0
-10
-20
15
29
43
Transcribed Image Text:Consider the following information about the various states of economy and the returns of varius investment aleatives for each scena. Answer the questions do lok State of the Economy Recond Below Age Average Above Average Beem Mean Standard Devation Coefficient Vari Covariance with MP Colation with Market Index Beta CAPM Reg. Return Vakers (Ovenaked Undeaked Faily Valed Nature of stock AggyDefa) Probability az 0.1 0.3 0.3 01 %. Return on T-Bills, Stocks and Market Index Market T- Bill 7 2 7 7 7 Phillips 20 35 50 Pay Rubber 117 made 10 -10 7 45 30 14.7 0 -10 -20 15 29 43
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