Over the next year horizon, the riskless rate is 4% and the expected equityrisk premium is 5%. A portfolio has a beta of 1.2.

1. 1. What is the expected return of the portfolio according to the CAPM?
2. 2. If the realized return of the market turned out to be 12%, and the portfolio had a 13% return, what was the alpha of the portfolio for the year?

Answer rating: 100% (QA)

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