Question: 3 Consider the following information: 6 points Expected Portfolio Return Beta Risk-free 6% 0 Market A 12.6 10.6 1.0 1.8 Check my work eBook

3 Consider the following information: 6 points Expected Portfolio Return Beta Risk-free

3 Consider the following information: 6 points Expected Portfolio Return Beta Risk-free 6% 0 Market A 12.6 10.6 1.0 1.8 Check my work eBook Required: a. Calculate the return predicted by CAPM for a portfolio with a beta of 1.8. (Round your answer to 2 decimal places.) Print Return References % b. What is the alpha of portfolio A. (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) Alpha % c. If the simple CAPM is valid, is the situation above possible? Yes No

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