Q)A mutual fund manager expects her portfolio to earn a rate of return of 9% this year. = 0.8, Rf = 4% and E(Rm) = 11%. Should you invest in her mutual fund?

A)Not enough information

B)*No

C)Yes

Q)Based on the following information, which of stocks A and B has the better risk-return trade-off? Stock A and B have expected returns of 9% and 11%, respectively. Stock A and B have betas of 0.9 and 1.4, respectively. The risk-free rate is 5%.

A)Neither as both have the same risk-return trade-off

B)Stock B

C)*Stock A