Asset W has an expected return of 11.4 percent and a beta of 1.40. If the risk-f

Question

Asset W has an expected return of 11.4 percent and a beta of 1.40. If the risk-free rate is 3.7 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.) Percentage of Portfolio in Asset W Portfolio Expected Return Portfolio Beta 0% 25 50 75 100 125 150 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

slope of line = 0.077 = 7.7%

Percentage of Portfolio Portfolio Portfolio in Asset W Expected Return Beta 0 % 3.70% 0 25.00% 5.63% 0.35 50.00% 7.55% 0.7 75.00% 9.48% 1.05 100.00% 11.40% 1.4 125.00% 13.33% 1.75 150.00% 15.25% 2.1

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