Asset W has an expected return of 13.65 percent and a beta of 1.38. If the risk-

Question

Asset W has an expected return of 13.65 percent and a beta of 1.38. If the risk-free rate is 4.63 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).) Percentage of Portfolio Portfolio Portfolio in Asset W Expected Return Beta 0% % 25 % 50 % 75 % 100 % 125 % 150 %

Explanation / Answer

Details Return Asset W=Rw Risk free rate=Rrf Expected Return 13.65% 4.63% Beta                  1.38                    -   Portfolio Returns & Portfolio Beta % Portfolio in Asset W=Ww % Portfolio in Risk Free Asset=Wrf Portfolio Expected Return=Ww*Rw+Wrf*Rrf Potfolio beta=W beta*Ww +0*Wrf 0% 100% 4.63%                   -   25% 75% 6.89%              0.35 50% 50% 9.14%              0.69 75% 25% 11.40%              1.04 100% 0% 13.65%              1.38 125% -25% 15.91%              1.73 150% -50% 18.16%              2.07

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