Rate of Return of Risk-Free Asset Assignment
February 18th, 2020
The market portfolio (M) has the expected rate of return E(rM) = 0.12. Security A is in the market portfolio. We know E(rA) = 0.17 and βA = 1.5.
(a) What is the rate of return of the risk-free asset (rf )? A new security
(B) is introduced to the market. βB = 0.8. Then what is “fair” expected rate of return of security B?Get Finance homework help today