Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Based on the following information, what is the correct representation of the APT? Asset 1 Asset 2 Risk Free Expected Return 12% 22% 4% Sensitivity

Based on the following information, what is the correct representation of the APT?

Asset 1

Asset 2

Risk Free

Expected Return

12%

22%

4%

Sensitivity to Factor 1

0.1

0.15

Sensitivity to Factor 2

-0.1

0.5

----------------------------------------------------------------

A) E(R) = .04 + 1(0.922) + 2(0.123)

B) E(R) = .04 + 1(0.832) + 2(0.032)

C) E(R) = .04 + 1(0.893) + 2(0.092)

D) E(R) = .04 + 1(0.725) + 2(-0.075)

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_2

Step: 3

blur-text-image_3

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

Financial Liberalization And The Performance Of Public Banks

Authors: Souad Guesmi

1st Edition

3841730493, 978-3841730497

More Books

Students also viewed these Finance questions

Question

Explain the process of biochemistry

Answered: 1 week ago