Question
Gabri is the manager of a portfolio with about 1000 stocks, and has paid close attention to ensure it is well diversified. For the next
Gabri is the manager of a portfolio with about 1000 stocks, and has paid close attention to ensure it is well diversified. For the next investment meeting he must estimate the return on his portfolio. He has determined that the portfolio standard deviation is 21%, and for the market the std dev is 23.7%. The expected market return is 10.7%, and the 13 week treasury rate is 2.5%. If the firm uses CAPM for expected return, what will be the estimated return for Gabri's portfolio?
a.
9.77
b.
4.22
c.
cannot be estimated without the calculated beta
d.
13.20
e.
8.20
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started