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# Given the information in the following table, calculate the risk premium to be earned of optimal portfolio using the index model . This is the expected return from the portfolio minus the risk-free rate. Asset Expected return (%) Beta Residual

Given the information in the following table, **calculate the risk premium to be earned of optimal portfolio using the index model**. This is the expected return from the portfolio minus the risk-free rate.

Asset | Expected return (%) | Beta | Residual std dev |

Stock A | 0.18 | 1.9 | 0.22 |

Stock B | 0.11 | 1.1 | 0.14 |

Stock C | 0.09 | 0.7 | 0.115 |

T-bills | 0.03 | 0 | 0 |

Index (market) | 0.1 | ||

Market std deviation | 0.2 |

- Expert Answer

## To calculate the risk premium of the optimal portfolio using the index model we need to use the form View the full answer

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