Question: How do you arrive at the answer to this problem? I know the answer is b. 10. If the simple CAPM is valid, which of

How do you arrive at the answer to this problem? I know the answer is b.

How do you arrive at the answer to this problem? I know

10. If the simple CAPM is valid, which of the situation is possible? Portfolio Beta b) Portfolio Expected return Expected return Standard Deviation A 20% 1.4 30% 35% B 25% 1.2 B 40% 25% Portfolio d) Portfolio Beta Expected return Standard Deviation Expected return Risk free 10% 0% Risk free 10% Market 18% 24% Market 18% 1.0 16% 12% 16% 0.9

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