What is the expected return of Berjaya Corp

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Reference no: EM132847622

Question - Berjaya Corp. has a very conservative beta of .7, while Biotech Corp. has a beta of 2.1. The T-bill rate is 5%, and the market is expected to return 15%.

(i) What is the expected return of Berjaya Corp., Biotech Corp., and a portfolio composed of 60% of Berjaya Corp. and 40% Biotech Corp.?

(ii) Why is Biotech Corp.'s expected return not three times that of Berjaya Corp.?

(iii) Discuss whether the standard deviation of a portfolio is, or is not, a weighted average of the standard deviations of the assets in the portfolio. Fully explain your answer.

Reference no: EM132847622

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