Given the following information:

(a) Calculate the betas for A and B.
(b) Determine the equation for the security market line.
(c) Calculate the required rates of return for the two stocks.
(d) Assume that an investor puts 70 percent in the market portfolio and 40 percent in the risk-free asset. What would the expected return and standard deviation of the portfolio be?

Question

Given the following information:
  
(a) Calculate the betas for A and B.
(b) Determine the equation for the security market line.
(c) Calculate the required rates of return for the two stocks.
(d) Assume that an investor puts 70 percent in the market portfolio and 40 percent in the risk-free asset. What would the expected return and standard deviation of the portfolio be?

Quizplus · Accepted Answer

The Answer of Given the following information:
  
(a) Calculate the betas for A and B.
(b) Determine the equation for the security market line.
(c) Calculate the required rates of return for the two stocks.
(d) Assume that an investor puts 70 percent in the market portfolio and 40 percent in the risk-free asset. What would the expected return and standard deviation of the portfolio be?

Given the Following Information