Homework 6.docx - A stock has a beta of 1.22 and an expected return of 12 percent A risk-free asset currently earns 3.9 percent a What is the expected

# Homework 6.docx - A stock has a beta of 1.22 and an...

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A stock has a beta of 1.22 and an expected return of 12 percent. A risk-free asset currently earns 3.9 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 .82, 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 11.2 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 2.42, 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.) You have a portfolio with the following: Stock Number of Shares Price Expected Return W 750 \$ 47 14% X 650 24 18 Y 400 60 16 Z 625 45 17 What is the expected return of your portfolio?

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• Fall '19
• Dmitrii L. Maslov

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