Problem 11-17 Using CAPM [LO 4]
A stock has a beta of 1.21 and an expected return of 11.9 percent. A risk-free asset currently earns 3.85 percent.
Required: (a) What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
Expected return %
(b) If a portfolio of the two assets has a beta of 0.81, what are the portfolio weights? (Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).)
Weight of the stock Weight of the risk-free asset
(c) If a portfolio of the two assets has an expected return of 11.1 percent, what is its beta? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Beta
(d) If a portfolio of the two assets has a beta of 2.41, what are the portfolio weights? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).)
Weight of the stock Weight of the risk-free asset
Problem 11-17 Using CAPM [LO 4]
| A stock has a beta of 1.21 and an expected return of 11.9 percent. A risk-free asset currently earns 3.85 percent. |
| Required: | |
| (a) | What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) |
| Expected return | % |
| (b) | If a portfolio of the two assets has a beta of 0.81, what are the portfolio weights? (Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).) |
| Weight of the stock | |
| Weight of the risk-free asset |
| (c) | If a portfolio of the two assets has an expected return of 11.1 percent, what is its beta? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) |
| Beta |
| (d) | If a portfolio of the two assets has a beta of 2.41, what are the portfolio weights? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).) |
| Weight of the stock | |
| Weight of the risk-free asset | |
Related questions
| A stock has a beta of 1.21 and an expected return of 11.9 percent. A risk-free asset currently earns 3.85 percent. What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) If a portfolio of the two assets has a beta of 0.81, what are the portfolio weights (Weight of the stock and Weight of the risk-free asset)? (Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).) If a portfolio of the two assets has an expected return of 11.1 percent, what is its beta? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) If a portfolio of the two assets has a beta of 2.41, what are the portfolio weights (Weight of the stock and Weight of the risk-free asset)? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 4 decimal places (e.g., 32.1616).) |
A stock has a beta of 1.31 and an expected return of 12.9 percent. A risk-free asset currently earns 4.35 percent.
a. What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Expected return %
b. If a portfolio of the two assets has a beta of .91, what are the portfolio weights? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)
| Weight of the stock | |
| Weight of the risk-free asset | |
c. If a portfolio of the two assets has an expected return of 12.1 percent, what is its beta? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Beta
d. If a portfolio of the two assets has a beta of 2.51, what are the portfolio weights? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)
| Weight of the stock | |
| Weight of the risk-free asset | |
A stock has a beta of 1.31 and an expected return of 12.9 percent. A risk-free asset currently earns 4.35 percent.
a. What is the expected return on a portfolio that is equally invested in the two assets? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Expected return %
b. If a portfolio of the two assets has a beta of .91, what are the portfolio weights? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)
| Weight of the stock | |
| Weight of the risk-free asset | |
c. If a portfolio of the two assets has an expected return of 12.1 percent, what is its beta? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Beta
d. If a portfolio of the two assets has a beta of 2.51, what are the portfolio weights? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)
| Weight of the stock | |
| Weight of the risk-free asset | |
