use the information on the table below to answer this question. Security Actual Return Beta A 12%
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Question:
use the information on the table below to answer this question.
Security Actual Return Beta
A 12% 1.2
B 10% 1.0
C 14% 1.4
- Assume the risk-free interest rate is 1% and the market risk premium is 5.5%. An investor would like to invest $40,000 in Security A, $25,000 in security B and $50,000 in Security C. Find the portfolio’s expected return.
- Find the portfolio’s actual return.
- Based on your answers to a and b, is the portfolio’s return higher or lower than required? How should prices react?
Related Book For
Introduction To Actuarial And Financial Mathematical Methods
ISBN: 9780128001561
1st Edition
Authors: Stephen Garrett
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