A stock has a beta of 1.13 and an expected return ...

A stock has a beta of 1.13 and an expected return of 12.1 percent.
A risk-free asset currently earns 5 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 .50, what are the portfolio weights?
c.  If a portfolio of the two assets has an expected return of 10 percent, what is its
beta?
d.  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.


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