Question: Consider the following information: Expected Return Beta Risk Free 7% 0 Market 12.2 1.0 A 11.0 1.6 a. Calculate the return predicted by CAPM for

Consider the following information:

Expected Return Beta

Risk Free 7% 0

Market 12.2 1.0

A 11.0 1.6

a.Calculate the return predicted by CAPM for a portfolio with a beta of 1.6.(Round your answer to 2 decimal places.)

b.What isthe alpha of portfolioA.(Negative value should be indicated by a minus sign.Round your answer to 2 decimal places.)

c.If the simple CAPM is valid, is the situation above possible?

Yes or No?

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