Portfolios
A stock has a beta of 1.2 and a return of 16%. A risk-free asset currently earns 5%.
a. What is the beta of the risk-free asset?
2. What is the return on the portfolio that is equally invested in the two assets (i.e. stock and risk-free asset)? 6.1f a portfolio of the two assets has a beta of 0.75, what are the portfolio weights? a. If a portfolio of the two assets has an return of 8%, what is its beta?
