An individual plans to invest in Stock A and/or Stock B. The expected returns are 9% and 10% for A and B, respectively. The betas are .95 and 1.25 for Stocks A and B, respectively.
1. Find the expected return for the portfolio if she invests 75% of her funds in Stock A.
2. Find the beta for the portfolio if she invests 75% of her funds in Stock A.
3. Suppose the investor wants to construct a portfolio with expected return equal to 9.5%. What are the portfolio weights for this portfolio? What is the beta for this portfolio?