1. Calculate the Beta and Expected Return of the portfolio. 2. If the real risk-free rate is 2.10%, the inflation premium is 3.30% and the expected market return is 11.75%, calculate the required return of the portfolio according to the CAPM. 3. Should you invest in this portfolio or not?
1. Calculate the Beta and Expected Return of the portfolio. 2. If the real risk-free rate is 2.10%, the inflation premium is 3.30% and the expected market return is 11.75%, calculate the required return of the portfolio according to the CAPM. 3. Should you invest in this portfolio or not?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
sangita
Transcribed Image Text:1.
2.
3.
Show all your work and calculations for full credit.
Asset
ABC
CW7C8 ALT: Classwork Assignment on Chapter 8
А
Amount
$67,000
$73,000
$85,000
Beta
0.47
1.23
1.97
Expected
Return
9.07%
11.66%
12.95%
Calculate the Beta and Expected Return of the portfolio.
If the real risk-free rate is 2.10%, the inflation premium is 3.30% and the expected market return is 11.75%,
calculate the required return of the portfolio according to the CAPM.
Should you invest in this portfolio or not?
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