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Suppose the risk-free rate is 4%, the return on the market is 12% and your portfolio beta was calculated as 1.25. What is the expected
Suppose the risk-free rate is 4%, the return on the market is 12% and your portfolio beta was calculated as 1.25.
What is the expected return on your portfolio?What is the market risk premium?
What is the risk premium on the portfolio?What base rate of return must be offered in addition to the risk premium to hold this portfolio?
Why do investors need to be offered a risk premium to hold this portfolio?
Is your portfolio, more or less risky than the market and why?
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