Problem 11-18 Using the SML [LO 4] Asset W has an expected return of 13.6 percen
ID: 2505039 • Letter: P
Question
Problem 11-18 Using the SML [LO 4]
Asset W has an expected return of 13.6 percent and a beta of 1.37. If the risk-free rate is 4.62 percent, complete the following table for portfolios of Asset W and a risk-free asset. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Enter your portfolio expected return answers as a percentage and round to 2 decimal places (e.g., 32.16). Round your portfolio beta answers to 3 decimal places (e.g., 32.161).)
Asset W has an expected return of 13.6 percent and a beta of 1.37. If the risk-free rate is 4.62 percent, complete the following table for portfolios of Asset W and a risk-free asset. (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Enter your portfolio expected return answers as a percentage and round to 2 decimal places (e.g., 32.16). Round your portfolio beta answers to 3 decimal places (e.g., 32.161).)
Explanation / Answer
Percentage of Portfolio Portfolio Portfolio in Asset W Expected Return Beta 0% 4.62% 0.000 25% 6.87% 0.343 50% 9.11% 0.685 75% 11.36% 1.028 100% 13.60% 1.370 125% 15.85% 1.713 150% 18.09% 2.055