Asset W has an expected return of 10 percent and a beta of 1.10. If the risk-fre

Question

Asset W has an expected return of 10 percent and a beta of 1.10. If the risk-free rate is 3 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 expected returns as a percent rounded to 2 decimal places, e.g., 32.16, and your 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? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Slope of the line

Explanation / Answer

Answer:

Slope of the line:3%

Percentage of Portfolio in Asset W Portfolio Expected return Portfolio beta 0% 3.00% 0 25% 4.93% 0.275 50% 6.85% 0.55 75% 8.78% 0.825 100% 10.70% 1.1 125% 12.63% 1.375 150% 14.55% 1.65

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