Suppose the risk-free asset’s rate of return is 2% and you forecast a return on the market portfolio of 8%. If the beta for some asset x is 1.2, what is the expected return on asset x?
Question 17.EX.1: Suppose the risk-free asset’s rate of return is 2% and you f...
E\left(R_{i}\right)=R_{f}+\beta_{i}\left(E\left(R_{M}\right)-R_{f}\right)
E\left(R_{i}\right)=0.02+1.2(0.08-0.02)=9.2 \%
Related Answered Questions
a. Disagree: Unsystematic risk is nearly eliminate...
The APT factors are unknown, and therefore cannot ...
The APT is more general because it allows for the ...
The fundamental principles of the APT model are th...
The law of one price implies that assets that have...
The homogeneous assumption in the CAPM is the assu...
The assumption regarding borrowing and lending at ...
The CAPM cannot be tested unless we specify the co...
An efficient portfolio in the presence of a risk f...