# Question: A portfolio that combines the risk free asset and the market

A portfolio that combines the risk-free asset and the market portfolio has an expected return of 7 percent and a standard deviation of 10 percent. The risk-free rate is 4 percent, and the expected return on the market portfolio is 12 percent. Assume the capital asset pricing model holds. What expected rate of return would a security earn if it had a .45 correlation with the market portfolio and a standard deviation of 55 percent?

## Answer to relevant Questions

Suppose the risk-free rate is 4.2 percent and the market portfolio has an expected return of 10.9 percent. The market portfolio has a variance of .0382. Portfolio Z has a correlation coefficient with the market of .28 and a ...Assume Stocks A and B have the following characteristics:The covariance between the returns on the two stocks is .001. a. Suppose an investor holds a portfolio consisting of only Stock A and Stock B. Find the portfolio ...What is data mining? Why might it overstate the relation between some stock attribute and returns?There are two stock markets, each driven by the same common force, F, with an expected value of zero and standard deviation of 10 percent. There are many securities in each market; thus, you can invest in as many stocks as ...Filer manufacturing has 8.3 million shares of common stock outstanding. The current share price is $53 and the book value per share is $4. Filer manufacturing also has two bond issues outstanding. The first bond issue has a ...Post your question