53) Consider the following information:

Portfolio	Expected Return			Standard Deviation
Risk-free		5.0	%		0	%
Market		12.4			32
A		10.4			21

a. Calculate the sharpe ratios for the market portfolio and portfolio A. (Round your answers to 2 decimal places.) Sharpe Ratio Market portfolio Portfolio A

b. If the simple CAPM is valid, state whether the above situation is possible? Yes or No

57) Consider the CAPM. The risk-free rate is 5%, and the expected return on the market is 17%. What is the expected return on a stock with a beta of 1.5?

a) 13.0% b) 31% c) 28.0% d)23.0%

58) A big increase in government spending is an example of a _________.

a)positive supply shock b)positive demand shock c)negative demand shock d)negative supply shock

62) According to the CAPM, what is the market risk premium given an expected return on a security of 9.8%, a stock beta of 1.2, and a risk-free interest rate of 5%?

a) 4.00% b)6.60% c)6.00% d)5.00%