5. (10 POINTS) Consider the following funds whose expected returns and volatilities are given in the...
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5. (10 POINTS) Consider the following funds whose expected returns and volatilities are given in the following table: Type of fund Eri management fee () Bio tech fund (B) .40 .60 .04 Critical minerals fund (C) .26 .40 .03 Market portfolio (M) .18 .24 0 where the management fee (f) is the percentage fee for holding the fund. The risk-free rate is 0.04.Is this situation compatible with the CAPM? Justify your answer. 5. (10 POINTS) Consider the following funds whose expected returns and volatilities are given in the following table: Type of fund Eri management fee () Bio tech fund (B) .40 .60 .04 Critical minerals fund (C) .26 .40 .03 Market portfolio (M) .18 .24 0 where the management fee (f) is the percentage fee for holding the fund. The risk-free rate is 0.04.Is this situation compatible with the CAPM? Justify your answer.
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