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Calculate the expected rate of return

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Question - A mutual fund manager expects her portfolio to earn a rate of return of 12% this year. The beta of her portfolio is .5. Assume rate of return available on risk-free assets is 5% and you expect the rate of return on the market portfolio to be 15%.

Required -

a. Calculate the expected rate of return that investors will demand of the portfolio.

b. Should you invest in this mutual fund?

Reference no: EM133088244

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