UPS, a delivery services company, has a beta of 1.4, and Wal-Mart has a beta of 0.9. The risk-free rate of interest is 4% and the market risk premium is 6%
What is the expected return on a portfolio with 50% of its money in UPS and the balance in Wal-Mart?
A) 10.9%
B) 10.4%
C) 12.0%
D) 13.1%
Answer: A
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