Equally weighted in the risk free asset

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The risk free rate is 4%, and the expected return on the market is 12%. There is also an asset X with a Beta of 1.5.What is the return on portfolio 1 consisting of 40% of asset X and the rest in an asset with no risk? What is the return on portfolio 2 which is equally weighted in the risk free asset, the market portfolio, and asset X?

a. The E(R) on portfolio 1 is 13.6% and the E(R) on portfolio 2 is 10.67%

b. The E(R) on portfolio 1 is 16% and the E(R) on portfolio 2 is 8.8%

c. The E(R) on portfolio 1 is 8.8% and the E(R) on portfolio 2 is 16%

d. The E(R) on portfolio 1 is 16% and the E(R) on portfolio 2 is 8.8%

e. The E(R) on portfolio 1 is 8.8% and the E(R) on portfolio 2 is 10.67%

Reference no: EM13812383

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