Question
You are given the following equilibrium expected returns and risks: E(Ra)= 12.2%; E(Rb)= 15.5%; Beta A= .7; Beta B= 1.25 a. What is the equation
You are given the following equilibrium expected returns and risks:
E(Ra)= 12.2%; E(Rb)= 15.5%; Beta A= .7; Beta B= 1.25
a. What is the equation of the security market line?
b. A portfolio made up of A (above) and another security, has a beta of 1.10 and expected return of 13%. Which one would you rather buy: A alone or both? Why?
Plese can your answer be with a small explanation.
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
11th edition
324422870, 324422873, 978-0324302691
