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Calculate the return predicted by capm for a portfolio

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Reference no: EM132494998

Consider the following information: Expected Return Beta Risk Free 7% 0

Market 12.2 1.0

A 11.0 1.6

a. Calculate the return predicted by CAPM for a portfolio with a beta of 1.6. (Round your answer to 2 decimal places.)

b. What is the alpha of portfolio A.(Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)

c. If the simple CAPM is valid, is the situation above possible?

Yes or No?

Reference no: EM132494998

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