Under the following conditions,what are the expected returns for stocks A and B?
$\begin{array}{ll}
\lambda^{0}=0.03 & \mathrm{~b}_{\mathrm{a}, 1}=1.5 \
\mathrm{k}_{1}=0.09 & \mathrm{~b}_{\mathrm{a}, 2}=0.8 \
\mathrm{k}_{2}=0.07 & \mathrm{~b}_{\mathrm{b}, 1}=1.20 \
& \mathrm{~b}_{\mathrm{b}, 2}=0.6
\end{array}$

A) 24.8% and 19.7%
B) 22.1% and 18.0%
C) 20.3% and 17.8%
D) 19.9% and 16.9%
E) 18.7% and 15.3%

Question

Under the following conditions,what are the expected returns for stocks A and B?
$\begin{array}{ll}
\lambda^{0}=0.03 & \mathrm{~b}_{\mathrm{a}, 1}=1.5 \
\mathrm{k}_{1}=0.09 & \mathrm{~b}_{\mathrm{a}, 2}=0.8 \
\mathrm{k}_{2}=0.07 & \mathrm{~b}_{\mathrm{b}, 1}=1.20 \
& \mathrm{~b}_{\mathrm{b}, 2}=0.6
\end{array}$

A) 24.8% and 19.7%
B) 22.1% and 18.0%
C) 20.3% and 17.8%
D) 19.9% and 16.9%
E) 18.7% and 15.3%

Quizplus · Accepted Answer

$R_{a}$$$\begin{array} { l } 
= \lambda ^ { 0 } + \left( \mathrm { b } _ {a,1 } \right) \left( \mathbf { c } _ { 1 } \right) + \left( \mathrm { b } _ { a,2 } \right) \left( \mathrm { k } _ { 2 } \right) \
= 0.03 + ( 1.5 ) ( 0.09 ) + ( 0.8 ) ( 0.07 ) \
= 0.03 + 0.135 + 0.056 = 22.180
\end{array}$$ $R_{b}$$$\begin{array} { l } 
= \lambda ^ { 0 } + \left( b _ { b,1 } \right) \left( \mathbf { s } _ { 1 } \right) + \left( b_{b,2 , } \right) \left( \mathbf { k } _ { 2 } \right) \
= 0.03 + ( 1.2 ) ( 0.09 ) + ( 0.6 ) ( 0.07 ) \
= 0.03 + 0.108 + 0.042 = 18.0 \%
\end{array}$$

Under the Following Conditions,what Are the Expected Returns for Stocks