Draw a diagram showing characteristic lines in risk premium form for two portfolios, A and B. A's
Question:
Draw a diagram showing characteristic lines in risk premium form for two portfolios, A and B. A's line is steeper than B's, with a lower intercept. Both alphas are significant.
a. Label each axis.
b. Which fund has the larger beta?
c. Based on a visual inspection, which fund has the larger alpha?
d. Which fund outperformed the market?
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a The vertical axis is ERp RF The horizontal axis ...View the full answer
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