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Using CAPM. A stock has a beta of 1.15 and an expected return of 10.4 percent.

/in /by

Using CAPM. A stock has a beta of 1.15 and an expected return of 10.4 percent. A risk free asset currently earns

3.8 percent.

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

B. If a portfolio of the two assets has a beta of .7, what are the portfolio weights?

C. If a portfolio of the two assets has an expected return of 9 percent, what is its beta?

D. If a portfolio of the two assets has a beta of 2.3, what are the portfolio weights? How do you interpret the weights for the two assets in this case? Explain

 
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