Suppose you form a portfolio consisting of $31,000 invested in a mutual fund with beta of 1.6, $18,000 invested in $19,000 invested in an index fund with the same beta as the entire market. Expected market risk premium is 6.3% Risk-free rate is 0.8% What the expected return of this portfolio according to the CAPM? a. 6.9% Ob. 6.6% O c. 7.2% d. 9.1% e. 5.8%

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Suppose you form a portfolio consisting of $31,000 invested in a mutual fund with beta of 1.6, $18,000 invested in Treasury securities
$19,000 invested in an index fund with the same beta as the entire market. Expected market risk premium is 6.3%. Risk-free rate is 0.8% What is the exped
return of this portfolio according to the CAPM?
O a. 6.9%
Ob. 6.6%
O c. 7.2%
d. 9.1%
e. 5.8%
Transcribed Image Text:Suppose you form a portfolio consisting of $31,000 invested in a mutual fund with beta of 1.6, $18,000 invested in Treasury securities $19,000 invested in an index fund with the same beta as the entire market. Expected market risk premium is 6.3%. Risk-free rate is 0.8% What is the exped return of this portfolio according to the CAPM? O a. 6.9% Ob. 6.6% O c. 7.2% d. 9.1% e. 5.8%
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