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What is portfolio beta and what is expected return

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The current risk free rate is 4% and the expected risk premium on the market portfolio is 7%.

Question 1: An asset has a beta of 1.2. What is the expected return on this asset? Interpret the number 1.2.

Question 2: An asset has a beta of 0.6.waht is the expected return on this asset?

Question 3: If we invest ½ of our money in the first asset and ½ of our money in the second, what is our portfolio beta and what is its expected return?

Question 4: Relative to the first asset our portfolio has a smaller expected return, why?

Question 5: Does this mean the first asset is better than the portfolio?

Reference no: EM132538853

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