Question: E(R) 5 ? (a) What is the Expected Return for a security with a Beta of 1.2? 10.5(%)/(1.5)=7% Expected return =5%+1.2**7%=13.4%
E(R)\ \ 5 ?\ (a) What is the Expected Return for a security with a Beta of 1.2?\
10.5(%)/(1.5)=7%\ Expected return
=5%+1.2**7%=13.4%\ (b) If a mutual fund manager also has a portfolio with a Beta of 1.2, and expects his portfolio\ to earn a rate of return of 10 percent, is it a good idea to invest? Why?
(a) What is the Expected Return for a security with a Beta of 1.2? 10.5%/1.5=7% Expected return =5%+1.27%=13.4% (b) If a mutual fund manager also has a portfolio with a Beta of 1.2, and expects his portfolio to earn a rate of return of 10 percent, is it a good idea to invest? Why
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