If a given stock in the portfolio had established 1.23 beta; the related expected return is at 11.7percent, and 3.5percent is the current earning of a risk-free asset;
a. Determine 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 0.7, what are the portfolio weights?
c. If a portfolio of the two assets has an expected return of 9%, what is its beta?
d. If a portfolio of the two assets has a beta of 2.46, what are the portfolio weights? How do you interpret the weights for the two assets in this case? Discuss.
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