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5. Using many years' worth of data, you have estimated that the slope of the so-called securities market line is about .08. That is, you've
5. Using many years' worth of data, you have estimated that the slope of the so-called "securities market line" is about .08. That is, you've found that if a portfolio's systematic risk increases by 1.0its risk premium should increase by about 8%. Given this information, if the risk-free rate is what is the current expected return of the so-called "market portfolio?" A. 5% B. 6.5% 8 % D. 12% E. 13%
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