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Question 2 () Discuss the essential features of the Capital Market Line and the Security Market [5096] Line () Assume that the following assets are
Question 2 () Discuss the essential features of the Capital Market Line and the Security Market [5096] Line () Assume that the following assets are priced according to the security market line: 0.5 A-1.5 R2-12% (a) What is the expected return on an asset with a beta of 1.8? [2596] (b) Suppose that over the same period two mutual funds had the following results (the above SML applies): Fund A Actual return-2%, beta-0.2 Fund B Actual return: 15.6%, beta-2.1 Discuss the funds' performance [25%)
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