If the simple CAPM is valid and all portfolios are priced correctly, which of the situations below is possible? Consider each situation independently, and assume the risk-free rate is 5%. A) Portfolio A Market B) Portfolio Portfolio Expected Return A Market A Market D) Expected Return Portfolio 15% 15% 20% 15% Expected Return 20% 15% Expected Return A 30% Market 15% All options are possible. Option A Option D Option B Option C Beta 1.2 1.0 Beta 12% 20 Beta 1.2 1.0 2.5 1.0 Beta
If the simple CAPM is valid and all portfolios are priced correctly, which of the situations below is possible? Consider each situation independently, and assume the risk-free rate is 5%. A) Portfolio A Market B) Portfolio Portfolio Expected Return A Market A Market D) Expected Return Portfolio 15% 15% 20% 15% Expected Return 20% 15% Expected Return A 30% Market 15% All options are possible. Option A Option D Option B Option C Beta 1.2 1.0 Beta 12% 20 Beta 1.2 1.0 2.5 1.0 Beta
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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