CORPORATE FINANCE
CORPORATE FINANCE
12th Edition
ISBN: 9781307702804
Author: Ross
Publisher: MCG/CREATE
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Chapter 11, Problem 31QAP
Summary Introduction

Adequate information:

Expected return on portfolio [E(RP)] = 9% or 0.09

Standard deviation of the portfolio (σP) = 16% or 0.16

Risk-free rate (Rf) = 4.1% or 0.041

Market expected return [E(RM)] = 11% or 0.11

Security correlation with the market (ρL,M) = 0.38

Standard deviation of the security (σ1) = 60% or 0.60

To compute: Expected rate of return on a security.

Introduction: Expected return on security refers to the yield or return that is anticipated on the security in the future.

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Chapter 11 Solutions

CORPORATE FINANCE