Assume that both Apple and Yahoo plot on the SML.Apple has a beta of 2.6 and an expected return of 21.2%.Yahoo has a beta of 0.90 and an expected return of 9.3%.The expected return on the market portfolio is 10%and the risk-free rate is 3%.If you wish to hold a portfolio consisting of Apple and Yahoo and have a portfolio beta equal to 1.5,what proportion of the portfolio must be in Apple? What is the expected return on the portfolio?
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