Question
Suppose there are two independent economic factors, M 1 and M 2 . The risk-free rate is 6%, and all stocks have independent firm-specific components
| Suppose there are two independent economic factors, M1 and M2. The risk-free rate is 6%, and all stocks have independent firm-specific components with a standard deviation of 50%. Portfolios A and B are both well diversified. |
| Portfolio | Beta on M1 | Beta on M2 | Expected Return (%) |
| A | 1.6 | 2.5 | 40 |
| B | 2.4 | -0.7 | 10 |
i need right answer please
| What is the expected returnbeta relationship in this economy? (Do not round intermediate calculations. Round your answers to 2 decimal places.) |
| Expected returnbeta relationship E(rP) = % + P1 + P2 |
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Finance For Housing An Introduction
Authors: Cathy Davis
1st Edition
1447306481, 978-1447306481
