Question
A mutual fund manager expects her portfolio to earn a rate of return of 10% this year. The beta of her portfolio is .9. Assume
| A mutual fund manager expects her portfolio to earn a rate of return of 10% this year. The beta of her portfolio is .9. Assume rate of return available on risk-free assets is 3% and you expect the rate of return on the market portfolio to be 13%. |
| a. | Calculate the expected rate of return that investors will demand of the portfolio. |
| b. | Should you invest in this mutual fund? |
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Fundamentals Of Multinational Finance
Authors: Michael H. Moffett, Arthur I. Stonehill, David K. Eiteman
1st Edition
