Problem $12-18$ Portfolio Risk and Return $($LO$2)$

Suppose that the S&P $500,$ with a beta of $1\mathrm{.}0,$ has an expected return of $14\%$ and T$-$bills provide a risk$-$free return of $5\%.$

a$.$ What would be the expected return and beta of portfolios constructed from these two assets with weights in the S&P $500$ of $(1)0$ ; $(2)0\mathrm{.}25$ ; $(3)0\mathrm{.}50$ ; $(4)0\mathrm{.}75$ ; $(5)1\mathrm{.}0?$

Note: Leave no cells blank $-$ be certaln to enter $"0"$ wherever requlred. Do not round Intermedlate calculations. Enter the value of Expected return as a percentage rounded to $2$ declmal places and value of Beta rounded to $2$ declmal places.

$\backslash$table$[[,$Expected Return,Beta$],[(1)0,,\%,],[(2)0\mathrm{.}25,,\%,],[(3)0\mathrm{.}50,,\%,],[(4)0\mathrm{.}75,,\%,],[(5)1\mathrm{.}0,,\%,]]$

b$.$ How does the expected return vary with beta?

Note: Do not round Intermedlate calculations.

The expected return

by

$\%$ for a one unit increase in beta.