Question
1. The expected market return is 7.84% with a standard deviation of 21.79%. The risk free rate is 2%. Northeastern Capital, LLC has a beta
1. The expected market return is 7.84% with a standard deviation of 21.79%. The risk free rate is 2%. Northeastern Capital, LLC has a beta of 1.6. According to CAPM, what's the expected return of Northeastern Capital, LLC? Enter a number with two decimal points. Answer the question in percentage terms, i.e., if the answer is 20%, enter 20.00.
2. The risk premium on the market portfolio is 7% with a standard deviation of 24%. You decide to put 54% of your money in stock A with a beta A of 1.3 and put the rest of your money in stock B with a Beta B of 1.6. What is the risk premium of your portfolio? Enter a number with two decimal points. Answer the question in percentage terms, i.e., if the answer is 20%, enter 20.00.
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