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The risk-free rate is 4.33 %. You are analyzing a potential investment that has an expected return of 20.92% and a standard deviation of 42.70 %. The "market" has a expected return of 13.16% and a standard deviation of 14.02 %. What is the expected return of your portfolio if the correlation between the investment and the market is 0.71 and you borrow 23% at the risk-free asset? Note: your answer should have at least two decimal places Correct Answer 24.7357

The risk-free rate is 4.33 %. You are analyzing a potential investment that has an expected return of 20.92% and a standard deviation of 42.70 %. The "market" has a expected return of 13.16% and a standard deviation of 14.02 %. What is the expected return of your portfolio if the correlation between the investment and the market is 0.71 and you borrow 23% at the risk-free asset? Note: your answer should have at least two decimal places Correct Answer 24.7357

Essentials Of Investments
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
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The risk-free rate is 4.33 %. You are analyzing a potential investment that has an expected return of 20.92% and a standard deviation of 42.70 %. The "market" has a expected return of 13.16% and a standard deviation of 14.02 %. What is the expected return of your portfolio if the correlation between the investment and the market is 0.71 and you borrow 23% at the risk-free asset? Note: your answer should have at least two decimal places Correct Answer 24.7357
Transcribed Image Text:The risk-free rate is 4.33 %. You are analyzing a potential investment that has an expected return of 20.92% and a standard deviation of 42.70 %. The "market" has a expected return of 13.16% and a standard deviation of 14.02 %. What is the expected return of your portfolio if the correlation between the investment and the market is 0.71 and you borrow 23% at the risk-free asset? Note: your answer should have at least two decimal places Correct Answer 24.7357
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