Question
The market portfolio has an expected return of 10% and consists of 30% in stock and 70% in real estate,and the risk-free interest rate is
The market portfolio has an expected return of 10% and consists of 30% in stock and 70% in real estate,and the risk-free interest rate is 5%.Based on the single-factor CAPM model and the following information on stock and property returns.
The standard deviation of stock performance:0.2
The standard deviation of real estate performance:0.1
The correlation between stock return and real estate return:0.3
Questions
What is the expected return for the stock?
What is the expected return for the real estate?
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Intermediate Financial Management
Authors: Eugene F Brigham, Phillip R Daves
14th Edition
0357516664, 978-0357516669
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