Assume that the expected return on portfolio M is 13 percent, with a standard deviation of 20 percent, and that RF is 5 percent The slope of the CML is In our example, a risk premium of 0 40 indicates that the market demands 0 40 percent return for each percent increase in portfolio risk (0 13 0 05...

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Assume that the expected return on portfolio M is 13 percent, with a standard deviation of 20

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Assume that the expected return on portfolio M is 13 percent, with a standard deviation of 20 percent, and that RF is 5 percent. The slope of the CML is

(0.13-0.05) 0.20 = 0.40

In our example, a risk premium of 0.40 indicates that the market demands 0.40 percent return for each percent increase in portfolio risk.

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Investments Analysis And Management

ISBN: 9781118975589

13th Edition

Authors: Charles P. Jones, Gerald R. Jensen

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Question Posted: Dec 31, 2023 10:34 AM

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Assume that the expected return on portfolio M is 13 percent, with a standard deviation of 20

Question:

(0.13-0.05) 0.20 = 0.40

Step by Step Answer:

Investments Analysis And Management

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