Suppose that the risk-free rate of 6 percent and the expected return on the investor's tangency portfolio

Question:

Suppose that the risk-free rate of 6 percent and the expected return on the investor's tangency portfolio is 14 percent, with a standard deviation of 24 percent.

a. Calculate the investor's expected risk premium per unit of risk.

b. Calculate the portfolio's expected return if the portfolio's standard deviation of return is 20 percent.

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...