Suppose that the S&P 500, with a beta of 1.0, has an expected return of 16%...
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Suppose that the S&P 500, with a beta of 1.0, has an expected return of 16% and T-bills provide a risk-free return of 7%. a. What would be the expected return and beta of portfolios constructed from these two assets with weights in the S&P 500 of (1) 0; (ii) 0.25; (iii) 0.50; (iv) 0.75; (v) 1.0? Note: Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Enter the value of Expected return as a percentage rounded to 2 decimal places and value of Beta rounded to 2 decimal places. (1) 0 (ii) 0.25 (iii) 0.50 (iv) 0.75 (v) 1.0 Expected Return % % % % % The expected return Beta b. How does the expected return vary with beta? Note: Do not round intermediate calculations. increases 0.00 0.25 0.50 0.75 1.00 by % for a one unit increase in beta. Suppose that the S&P 500, with a beta of 1.0, has an expected return of 16% and T-bills provide a risk-free return of 7%. a. What would be the expected return and beta of portfolios constructed from these two assets with weights in the S&P 500 of (1) 0; (ii) 0.25; (iii) 0.50; (iv) 0.75; (v) 1.0? Note: Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Enter the value of Expected return as a percentage rounded to 2 decimal places and value of Beta rounded to 2 decimal places. (1) 0 (ii) 0.25 (iii) 0.50 (iv) 0.75 (v) 1.0 Expected Return % % % % % The expected return Beta b. How does the expected return vary with beta? Note: Do not round intermediate calculations. increases 0.00 0.25 0.50 0.75 1.00 by % for a one unit increase in beta.
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To calculate the expected return and beta of portfolios with different weights in the SP 500 and Tbi... View the full answer
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
Posted Date:
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