Suppose that the return on the risk-free asset is rRFrRF = 15%, the return on the market portfolio is r̂Mr̂M = 20%, the market risk is σMσM = 10%, and the portfolio risk is σpσp = 15%. Then the expected rate of return on an efficient portfolio equals . Generally, a less risky portfolio would havea lower rate of return.
Suppose that the return on the risk-free asset is rRFrRF = 15%, the return on the market portfolio is r̂Mr̂M = 20%, the market risk is σMσM = 10%, and the portfolio risk is σpσp = 15%. Then the expected rate of return on an efficient portfolio equals . Generally, a less risky portfolio would havea lower rate of return.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter3: Risk And Return: Part Ii
Section: Chapter Questions
Problem 2P: APT
An analyst has modeled the stock of Crisp Trucking using a two-factor APT model. The risk-free...
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Suppose that the return on the risk-free asset is rRFrRF = 15%, the return on the market portfolio is r̂Mr̂M = 20%, the market risk is σMσM = 10%, and the portfolio risk is σpσp = 15%. Then the expected rate of return on an efficient portfolio equals .
Generally, a less risky portfolio would havea lower rate of return.
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