A stock has a beta of 1.5, 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 1.3. What is the expected return on this portfolio?

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To calculate the expected return on the portfolio we can use the capital asset pricin... View the full answer