Assume the CAPM holds. Let the risk-free interest rate be 0.04 and let the expected return of
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Assume the CAPM holds. Let the risk-free interest rate be 0.04 and let the expected return of a market portfolio be equal to 0.08. Suppose that stock X has X = 2 and that stock Y has Y = 0.8. Using the risk-free asset, stock X, and stock Y , you create a portfolio such that the weight given to X equals the weight given to Y while the weight of the risk-free asset is 0.2. What is the expected return of this portfolio?
Related Book For
Fundamentals Of Corporate Finance
ISBN: 9780135811603
5th Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
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