Question
NEED QUESTION 3 ONLY 1. The expected rate of return on the market portfolio is 11.50% and the riskfree rate of return is 2.00%. The
NEED QUESTION 3 ONLY
1. The expected rate of return on the market portfolio is 11.50% and the riskfree rate of return is 2.00%. The standard deviation of the market portfolio is 19.75%. What is the representative investors average degree of risk aversion?
2. Stock A has a beta of 1.50 and a standard deviation of return of 32%. Stock B has a beta of 3.50 and a standard deviation of return of 58%. Assume that you form a portfolio that is 45% invested in Stock A and 55% invested in Stock B. Using the information in question 1, according to CAPM, what is the expected rate of return on your portfolio?
3. Using the information in questions 1 and 2, what is your best estimate of the correlation between stocks A and B?
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How To Value Buy Or Sell A Financial Advisory Practice
Authors: Mark C. Tibergien, Owen Dahl
1st Edition
1576601749, 978-1576601747
