Find expected return on portfolio that is equally invested

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A stock has a beta of 1.13 and an expected return of 12.1 percent. A risk-free asset currently earns 5 percent.

1. What is the expected return on a portfolio that is equally invested in the two assets?

2. If a portfolio of the two assets has a beta of .50, what are the portfolio weights?

3. If a portfolio of the two assets has an expected return of 10 percent, what is its beta?

4. If a portfolio of the two assets has a beta of 2.26, what are the portfolio weights? How do you interpret the weights for the two assets in this case? Explain.

Reference no: EM13328237

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