A Portfolio invest in risk-free asset and the market portfolios has an expected return of 7 % and a standard deviation of 10%. Suppose the risk-free rate is 4%, and standard deviation on the market portfolio is 22 %. According to the CAPM, what expected rate of return would a security earn if it had a 0.55 beta?

Answer rating: 100% (QA)

The Capital Asset Pricing Model CAPM formula is ERi Rf betaiERm Rf Where ERi Expec... View the full answer