Suppose Intel stock has a beta of 0.95, whereas Boeing stock has a beta of 2.2. If

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Suppose Intel stock has a beta of 0.95, whereas Boeing stock has a beta of 2.2. If the risk-free interest rate is 4% and the expected return of the market portfolio is 10%, according to the CAPM,

a. What is the expected return of Intel stock?

b. What is the expected return of Boeing stock?

c. What is the beta of a portfolio that consists of 60% Intel stock and 40% Boeing stock?

d. What is the expected return of a portfolio that consists of 60% Intel stock and 40% Boeing stock? (Show both ways to solve this.)

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Fundamentals Of Corporate Finance

ISBN: 9780137852581

6th Edition

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

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