# Question: Suppose the risk free rate is 4 2 percent and the market

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 variance of .3285. According to the capital asset pricing model, what is the expected return on Portfolio Z?

**View Solution:**## Answer to relevant Questions

Consider the following information about Stocks I and II:The market risk premium is 7.5 percent, and the risk-free rate is 4 percent. Which stock has the most systematic risk? Which one has the most unsystematic risk? Which ...You are discussing your 401(k) with Dan Ervin when he mentions that Sarah Brown, a representative from Bledsoe Financial Services, is visiting East Coast Yachts today. You decide that you should meet with Sarah, so Dan sets ...A researcher has determined that a two-factor model is appropriate to determine the return on a stock. The factors are the percentage change in GNP and an interest rate. GNP is expected to grow by 3.6 percent, and the ...Assume that the following market model adequately describes the return-generating behavior of risky assets: Rit = αi + βi RMt + εitHere: Rit = The return on the ith asset at Time t. RMt = The return on a portfolio ...Kose, Inc., has a target debt–equity ratio of .45. Its WACC is 11.2 percent, and the tax rate is 35 percent. a. If Kose’s cost of equity is 15 percent, what is its pretax cost of debt? b. If instead you know that the ...Post your question