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The current rate of return on the market index is 28%, the market total risk is 50%. The rate of return on the 52-week T-bills
The current rate of return on the market index is 28%, the market total risk is 50%. The rate of return on the 52-week T-bills is 6.5%. a) Assuming that the following securities exist in this market, mark (sketch as accurately as possible) their position on a chart (total risk vs. rate of return) in relation to the Capital Market Line: Security Expected rate of return 0 23% 44% B 31% 57% 12% 12.79% b) In each case explain what means the position of instrument on a chart. C) Assuming that the correlation coefficient of the rates of return of securities A and B is (-0.7), construct a minimum risk (variance) portfolio using these instruments. Provide a rate of return of such portfolio
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