A stock has a beta of 1.4, an expected return of 17.2 percent, and lies on the security market line. A risk-free asset is yielding 3.2 percent. You want to create a portfolio that is comprised of the stock and the risk free and will have a portfolio beta of 0.6. What is the expected return on this portfolio?
Added by Ryan G.
Step 1
2% - 3.2%) / 1.4 Expected return of the market = 13.2% / 1.4 Expected return of the market = 9.43% Show more…
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