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Suppose the risk premium on the market portfolio is estimated at 8% with a standard deviation of 22% You decide to put 25% of your

Suppose the risk premium on the market portfolio is estimated at 8% with a standard deviation of 22%

  • You decide to put 25% of your money in Toyota and 75% of your money in Ford
  • Suppose the beta of Toyota = 1.10
  • Suppose the beta of Ford = 1.25
  • What is the risk premium of your portfolio?

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