Asset W has an expected return of 12.6 percent and a beta of 1.25. If the risk-f

Question

Asset W has an expected return of 12.6 percent and a beta of 1.25. If the risk-free rate is 4.6 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?

Asset W has an expected return of 12.6 percent and a beta of 1.25. If the risk-free rate is 4.6 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))

Explanation / Answer

Formula for expected return = Expected return of asset W* Weight of W + Expected return of Risk free asset * Weight of Risk Free asset

For example = 12.6*0% + 4.6*100% = 4.60%

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 Portfolio Portfolio in Asset W Expected Return Beta 0 4.60 0 25 6.60 0.313 50 8.60 0.625 75 10.60 0.938 100 12.60 1.25 125 14.60 1.563 150 16.60 1.875

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