Suppose you have $3,600 to invest in Securities A and B.Security A has an expected return of 6 percent and a beta of 0.5.Stock B has an expected return of 20 percent and a beta of 1.8.What is the expected return on the portfolio if the portfolio beta is 2.0?
A) 24.00%
B) 23.65%
C) 22.15%
D) 22.22%

Question

Quizplus · Accepted Answer

Portfolio weight in A,11ea8229_34d0_2ec9_bbd8_f5716ca306ce_TB1726_11,Weight in B = 1 - (-0.1538)= 1.1538
Portfolio expected return, 11ea8229_34d0_55da_bbd8_89fbec55bbe6_TB1726_00

Suppose You Have $3,600 to Invest in Securities a and B.Security