Max wants a portfolio with a beta of 1.2. He currently has two stocks in his portfolio. Stock A with a beta of 1.5 and Stock B with a beta of 0.8. If the risk-free rate is 2% and the market return is 8%, what will his portfolio’s expected return be and how should he allocate his money among the two stocks?

Carl plans to add one of two alternative stocks to his portfolio. Stock A has a correlation of 0.70 with his portfolio and Stock B has a correlation of 0.10. Both stocks have the same standard deviation of returns. Based on this information, relative to Stock A, Stock B will result in: a. less total risk and more active risk for the portfolio b. less total risk and less active risk for the portfolio С. more total risk and less active risk for the portfolio d. more total risk and more active risk for the portfolio

An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 15% and a standard deviation of return of 25%. Stock B has an expected return of 10% and a standard deviation of return of 20%. The correlation coefficient between the returns of A and B is 0.5. The risk-free rate of return in this economy is 4%. The investor wishes to construct an optimal risky E[rp]-rf portfolio (i.e. the portfolio with the highest Sharpe ratio = -). The proportion of the optimal risky portfolio that should be invested in stock A is 65.14% 82.25% 71.15% 74.36% 68.20%

(Security market line) You are considering the construction of a portfolio comprised of equal investments in each of four different stocks. The betas for each stock are found below Asset A Beta 2.30 B C D 0.80 0.60 -1.60 (Click on the icon in order to copy its contents into a spreadsheet.) a. What is the portfolio beta for your proposed investment portfolio? b. How would a 25 percent increase in the expected return on the market impact the expected return of your portfolio? c. How would a 25 percent decrease in the expected return on the market impact the expected return on each asset? d. If you are interested in decreasing the beta of your portfolio by changing your portfolio allocation in two stocks, which stock would you decrease and which would you increase? Why? a. The portfolio beta for your proposed investment portfolio is (Round to three decimal places)