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What is the expected return of portfolio

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Assume the CAPM holds. Let the risk-free interest rate be 0.04 and let the expected return of a market portfolio be equal to 0.08. Suppose that stock X has βX = 2 and that stock Y has βY = 0.8. Using the risk-free asset, stock X, and stock Y , you create a portfolio such that the weight given to X equals the weight given to Y while the weight of the risk-free asset is 0.2. What is the expected return of this portfolio?

Reference no: EM133119901

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