Astock has a beta of 1.05 and an expected return of 11 percent. a risk-free asset currently earns 2.4 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.) b. if a portfolio of the two assets has a beta of .63, what are the portfolio weights?

a. 6.7%

b. 0.6 and 0.4

Explanation:

The computations are shown below:

a. Expected rate of return = (Probability 1 × Possible Returns 1) + (Probability 2 × Possible Returns 2)

= (0.50 × 0.11) + (0.50 × 0.024)

= 0.055 + 0.012

= 6.7%

b. Portfolio beta = beta of stock × weightage of stock + beta of risk free asset × weightage of risk free asset

0.63 = 1.05  × weightage of stock + 0

So,  Weightage of stock = 0.6

And, the weightage of risk free asset is 0.4

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so, to answer your question 1.

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- courtney

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi