Question: A stock has beta of 1.5 & an expected return of 11 percent. A risk free asset earns 2%.
[A] If a portfolio of the two assets has an expected return of 9 percent, determine the beta?
[B] Calculate the expected return on a portfolio that is equally invested in the two assets?
[C] If a portfolio of the two assets has a beta of 0.9 determine the portfolio weights?
[D] If a portfolio of the two assets has a beta of 1.80, determine the portfolio weights? How do you interpret the weights for the two assets in this case? Explain your reason.