Question: Cannot Figure out how to do this problem. Please post solution with steps, thank you! A portfolio that combines the risk-free asset and the market
Cannot Figure out how to do this problem. Please post solution with steps, thank you!
A portfolio that combines the risk-free asset and the market portfolio has an expected return of 7.5 percent and a standard deviation of 10.5 percent. The risk-free rate is 4.5 percent, and the expected return on the market portfolio is 12.5 percent. Assume the capital asset pricing model holds. What expected rate of return would a security earn if it had a .50 correlation with the market portfolio and a standard deviation of 55.5 percent? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected rate of return
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