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A mutual fund manager expects her portfolio to earn a rate of return of 14% this year. The beta of her portfolio is .8. Assume
A mutual fund manager expects her portfolio to earn a rate of return of 14% this year. The beta of her portfolio is .8. Assume rate of return available on risk-free assets is 7% and you expect the rate of return on the market portfolio to be 17%.
a. | Calculate the expected rate of return that investors will demand of the portfolio. |
Expected rate of return | % |
b. | Should you invest in this mutual fund? | ||||
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