Question: A mutual fund manager expects her portfolio to earn a rate of return of 14% this year. The beta of her portfolio is .6. Assume

A mutual fund manager expects her portfolio to earn a rate of return of 14% this year. The beta of her portfolio is .6. Assume rate of return available on risk-free assets is 6% and you expect the rate of return on the market portfolio to be 16%.

a.	Calculate the expected rate of return that investors will demand of the portfolio.

Expected rate of return

Should you invest in this mutual fund?

	No
	Yes

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Question: A mutual fund manager expects her portfolio to earn a rate of return of 14% this year. The beta of her portfolio is .6. Assume

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