Both Assets B and C Plot on the SML

question 84

Multiple Choice

Both assets B and C plot on the SML.Asset B has a beta of 1.3 and an expected return of 13.1%.Asset C has a beta of .50 and an expected return of 7.50%.The risk-free rate is 4%.If you wish to hold a portfolio consisting of assets B and C,and have a portfolio beta equal to 1.0,what is the expected return of the portfolio?

• A)4.0%
• B)7.5%
• C)11.0%
• D)13.1%