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CAPM Analysis Stock X has a beta of ßx = 1.25. Stock Y has a beta of ßy = -0.50. You construct a portfolio with a weight of wx = 0.80 invested in stock X and wy = 0.20 invested in stock Y. The risk-free rate is rf = 3%. a) If the market return is m = 8%, what is the expected return of your portfolio? b) If the market return is m = -6%, what is the expected return of your portfolio? Enter your answer in the table below in the cells colored yellow. You must show all work to receive credit. Question a) b) Answer

CAPM Analysis Stock X has a beta of ßx = 1.25. Stock Y has a beta of ßy = -0.50. You construct a portfolio with a weight of wx = 0.80 invested in stock X and wy = 0.20 invested in stock Y. The risk-free rate is rf = 3%. a) If the market return is m = 8%, what is the expected return of your portfolio? b) If the market return is m = -6%, what is the expected return of your portfolio? Enter your answer in the table below in the cells colored yellow. You must show all work to receive credit. Question a) b) Answer

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter3: Risk And Return: Part Ii
Section: Chapter Questions
Problem 2P: APT An analyst has modeled the stock of Crisp Trucking using a two-factor APT model. The risk-free...
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CAPM Analysis = -0.50. You construct a Stock X has a beta of x = 1.25. Stock Y has a beta of By portfolio with a weight of wx = 0.80 invested in stock X and wy = 0.20 invested in stock Y. The risk-free rate is rf = 3%. a) If the market return is m = 8%, what is the expected return of your portfolio? b) If the market return is 1m = -6%, what is the expected return of your portfolio? Enter your answer in the table below in the cells colored yellow. You must show all work to receive credit. Question a) b) Answer
Transcribed Image Text:CAPM Analysis = -0.50. You construct a Stock X has a beta of x = 1.25. Stock Y has a beta of By portfolio with a weight of wx = 0.80 invested in stock X and wy = 0.20 invested in stock Y. The risk-free rate is rf = 3%. a) If the market return is m = 8%, what is the expected return of your portfolio? b) If the market return is 1m = -6%, what is the expected return of your portfolio? Enter your answer in the table below in the cells colored yellow. You must show all work to receive credit. Question a) b) Answer
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