From the following data calculate the information ratio: Risk free rate: 6% Beta:1.3 Market rate: 11.60% Actual return: 14.5% Tracking error: 9.30% O 0.1211 0.1921 0.1721 0.1312

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A: Market return = 10% Expected return = 16% Alpha = 2%

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A: Actual return = 9.5%/100 = 0.0950 in decimalsRisk-free rate = 2.6%/100 = 0.0260 in decimalsBeta…

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A: expected return is the amount of profit an investor can expect receiving on an investement.

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A: Here,Beta q is 1.25rf is 2%rm is 12%rq is 13.5%

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A: The risk free rate can be calculated as per the capital asset pricing model.

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A: Expected Return Mean = sum of (Probability * Return)

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Q: What is the risk free return?

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A: Given: Weight = 12.8% Return = 16%

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A: Given details are : Risk free rate (Rf) = 3.9% Expected market return (Rm) = 13% Beta = 1.25 From…

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A:

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A: Calculation of required rate of return:Answer:The required rate of return is 8.425%

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A: The expected return of the asset with a beta of -0.8 is -3.72%. This indicates that the asset is…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.