Table 8.3
Consider the following two securities X and Y.
-Using the data from Table 8.3,what is the portfolio expected return and the portfolio beta if you invest 35 percent in X,45 percent in Y,and 20 percent in the risk-free asset?
A)9.875%,0.975
B)10.125,1.025
C)8.875%,0.975
D)20.5%,1.250

Question

Table 8.3
Consider the following two securities X and Y. 
-Using the data from Table 8.3,what is the portfolio expected return and the portfolio beta if you invest 35 percent in X,45 percent in Y,and 20 percent in the risk-free asset?
A)9.875%,0.975 
B)10.125,1.025 
C)8.875%,0.975 
D)20.5%,1.250

Quizplus · Accepted Answer

Portfolio Expected Return = (0.35 x 12%) + (0.45 x 8%) + (0.20 x 3%) = 9.875%
Portfolio Beta = (0.35 x 1.2) + (0.45 x 0.8) = 0.975

Table 8.3 Consider the Following Two Securities X and Y