b) Assume that one of these portfolio's is the Market Portfolio. Given that all portfolios, except...
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b) Assume that one of these portfolio's is the Market Portfolio. Given that all portfolios, except portfolio G, are fairly priced according to the CAPM, what is the market risk premium? (1 mark) Consider the following seven (7) portfolios plotted with the Minimum Variance Frontier. Assume all portfolios, except portfolio G, are fairly priced according to the CAPM: A B C D E IF Expected Return G 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 0.0% 5.0% Minimum Variance Frontier 12.2% 20.2% 23.6% 26.4% 15.0% 20.2% 3.0% A 10.0% B E 15.0% Standard Deviation C 11.4% 15.7% 19.5% 22.7% 15.7% 22.5% 19.0% G 20.0% D The risk-free rate in the market is 8.0%. The return and risk of each of the seven portfolios is as follows: Portfolio Expected Return Standard Deviation Fo 25.0% 30.0% b) Assume that one of these portfolio's is the Market Portfolio. Given that all portfolios, except portfolio G, are fairly priced according to the CAPM, what is the market risk premium? (1 mark) Consider the following seven (7) portfolios plotted with the Minimum Variance Frontier. Assume all portfolios, except portfolio G, are fairly priced according to the CAPM: A B C D E IF Expected Return G 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 0.0% 5.0% Minimum Variance Frontier 12.2% 20.2% 23.6% 26.4% 15.0% 20.2% 3.0% A 10.0% B E 15.0% Standard Deviation C 11.4% 15.7% 19.5% 22.7% 15.7% 22.5% 19.0% G 20.0% D The risk-free rate in the market is 8.0%. The return and risk of each of the seven portfolios is as follows: Portfolio Expected Return Standard Deviation Fo 25.0% 30.0%
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