Asset W has an expected return of 10.2 percent and a beta of 1.20. If the risk-f

Question

Asset W has an expected return of 10.2 percent and a beta of 1.20. If the risk-free rate is 4.2 percent, complete the following table for portfolios of Asset W and a risk-free asset. (Round your expected return answers to 2 decimal places. (e.g., 32.16) and beta answers to 3 decimal places. (e.g., 32.161))

If you plot the relationship between portfolio expected return and portfolio beta, what is the slope of the line that results? (Round your answer to 2 decimal places. (e.g., 32.1616))

Percentage of Portfolio
in Asset W
Portfolio
Expected Return
Portfolio
Beta
0 % % 25 % 50 % 75 % 100 % 125 % 150 %

Explanation / Answer

Completed table:

And Slope = 5%

Percentage in Asset W Expected Return Portfolio Beta 0% 4.2% 0 25% 5.7% 0.3 50% 7.2% 0.6 75% 8.7% 0.9 100% 10.2% 1.2 125% 11.7% 1.5 150% 13.2% 1.8

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