Asset W has an expected return of 11.8 percent and a beta of 1.20. If the risk-f

Question

Asset W has an expected return of 11.8 percent and a beta of 1.20. If the risk-free rate is 3.4 percent, complete the following table for portfolios of Asset W and a risk-free asset. (Round your expected return answers to 2 decimal places. (e.g., 32.16) and beta answers to 3 decimal places. (e.g., 32.161))

If you plot the relationship between portfolio expected return and portfolio beta, what is the slope of the line that results? (Round your answer to 2 decimal places. (e.g., 32.1616))

Asset W has an expected return of 11.8 percent and a beta of 1.20. If the risk-free rate is 3.4 percent, complete the following table for portfolios of Asset W and a risk-free asset. (Round your expected return answers to 2 decimal places. (e.g., 32.16) and beta answers to 3 decimal places. (e.g., 32.161))

Explanation / Answer

Slope of line =( y2 - y1)/(x2 - x1) = (7.6 - 5.5)/(0.6 - 0.3) = 2.1/.3 = 7

Percentage of Portfolio in Asset W Portfolio Expected Return Portfolio beta 0 0 3.40% 0 25 0.25 5.5 0.3 50 0.5 7.6 0.6 75 0.75 9.7 0.9 100 1 11.8 1.2 125 1.25 13.9 1.5 150 1.5 16 1.8 Slope of line = C6*11.8 + (1-C6)*3.4 Formula used for portfolio return = B6*11.8 + (1-B6)*3.4 Formula used for beta = B6*1.2

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.