Question
A mutual fund manager expects her portfolio to earn a rate of return of 12% this year. The beta of her portfolio is .5. Assume
| A mutual fund manager expects her portfolio to earn a rate of return of 12% this year. The beta of her portfolio is .5. Assume rate of return available on risk-free assets is 5% and you expect the rate of return on the market portfolio to be 15%. |
| a. | Calculate the expected rate of return that investors will demand of the portfolio. |
| Expected rate of return | % |
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Contemporary Financial Management
Authors: R. Charles Moyer, William J. Kretlow, James R. Mcguigan
7th Edition
0538877766, 9780538877763
