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The expected return for the market is 12 percent with a standard deviation of 21 percent. The risk-free rate is 8 percent. Information is available
The expected return for the market is 12 percent with a standard deviation of 21 percent. The risk-free rate is 8 percent. Information is available for five mutual funds, all assumed to be efficient:
Mutual Funds | (%) |
Affiliated | 14 |
Omega | 16 |
Ivy | 21 |
Value Line Fund | 25 |
New Horizons | 30 |
- Calculate the slope of the CML.
- Calculate the expected return for each fund.
- Rank the funds in increasing order of risk.
- Do any of the funds have the same expected return as the market? Why?
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