According to the CAPM, what must be the beta of a portfolio with expected return 0.25,...
According to the CAPM, what must be the beta of a portfolio with expected return 0.25, if the risk-free rate is 0.07 and the market risk premium is 0.12? Assume that the stock is fairly priced according to the CAPM.
Homework Answers
expected return=risk free rate+beta*market risk premium
0.25=0.07+beta*0.12
beta=(0.25-0.07)/0.12
=1.5
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According to the CAPM, what must be the beta of a portfolio with
expected return 0.25,...
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