FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

An investor holds two well-diversified portfolios on US securities. The expected return on portfolio A is 11% and the expected return on portfolio B is

An investor holds two well-diversified portfolios on US securities. The expected return on portfolio A is 11% and the expected return on portfolio B is 9%. The investor identified that the US economy has only one factor (industrial production), and A = 1 and B = 0.7.

What should be the risk-free rate according to the APT?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Handbook Of Traditional And Alternative Investment Vehicles Investment Characteristics And Strategies

The Handbook Of Traditional And Alternative Investment Vehicles Investment Characteristics And Strategies

Authors: Mark J. P. Anson, Frank J. Fabozzi, Frank J. Jones

1st Edition

0470609737, 978-0470609736

More Books

Students also viewed these Finance questions

Question

★★★★★
Saxon Company provides the following account balances as of July 31: Required Prepare a trial balance as of July 31. Accounts Payable Accounts Receivable Buildings Cash Common Stock Dividends Notes...

Answered: 1 week ago

Question

★★★★★
Suppose that the SAT scores for 50 states were calculated and that one was trying to predict math scores based on reading scores. The regression equation comes out to y = 35.4 + 0.67x California had...

Answered: 1 week ago

Question

★★★★★
_________ Primary emphasis in the economic model of social responsibility is on a. quality of life. b. conservation of resources. c. market-based decisions. d. production. e. fi rms and communitys...

Answered: 1 week ago

Question

★★★★★
Tess is the development manager for the Isabelle Stewart Gardner Museum in Boston. She was in the middle of a large campaign to raise $50 million for a building expansion project. Her development...

Answered: 1 week ago

Question

★★★★★
An investor holds two well-diversified portfolios on US securities. The expected return on portfolio A is 11% and the expected return on portfolio B is 9%. The investor identified that the US economy...

Answered: 1 week ago

Question

★★★★★
Freight terms Determine the amount to be paid in full settlementof each of two invoices, (a) and (b), assuming that credit forreturns and allowances was received prior to payment and that allinvoic 0...

Answered: 1 week ago

Question

★★★★★
Thinking about your natural negotiation style, ask yourself: In general, when does your style help you and when does it not help you in negotiation situations? Now, think about how you can translate...

Answered: 1 week ago

Question

★★★★★
There are three (3) columns, the first column is the reduction of prevention costs, second column is progressive reduction of appraisal costs, and the last column is reduction of failure costs. 2.In...

Answered: 1 week ago

Question

★★★★★
( Scenario 1 4 - 1 ) After it launched, PlayWithMe contracted with three major search engines to show its advertisements any time a user searched for certain terms that were closely identified with...

Answered: 1 week ago

Question

★★★★★
There are three different methods commonly used for capturing network data. These are (1) using a network tap, (2) using a SPAN port on a switch, and (3) using a tool built into a network device...

Answered: 1 week ago

Question

★★★★★
Gross amount of invouce is $ 8 5 0 . there is no freight charge. date of invoice is 8 / 4 . terms of invoice are 3 / 1 0 , 2 / 1 5 and n / 3 0 . date of payment is 8 / 1 8 . find the cash discount....

Answered: 1 week ago

Question

★★★★★
2. One union newspaper indicated how it saved an employees job. The employee was in the mechanics classification and was discharged for refusing to comply with managements sudden, unilateral rule...

Answered: 1 week ago

Question

★★★★★
broadening cross-cultural analysis to include an understanding of integrationdifferentiation in global managing;

Answered: 1 week ago

Question

★★★★★
developing the relevance of cross-cultural studies through an incorporation of stakeholder analysis of particular interaction situations;

Answered: 1 week ago

Previous Question Next Question