Determine whether the information is given is consistent

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For each of the scenarios below, determine whether the information that is given is consistent with the Capital Asset Pricing Model. (i.e., it is possible that the information as well as the CAPM are true) Explain your reasoning. Suggestion: Use the mean-SD diagram.

The three parts should be done independently.

Scenario 1)
***Portfolio --- Expected Return -- Standard Deviation***
Risk Free --- 4% -- 0%
Market --- 14% --- 20%
Fund A --- 16% --- 18%

Scenario 2)
***Portfolio --- Expected Return -- Return Beta***
Blue Fund --- 30% --- 0.8
Red Fund --- 20% --- 1.1

Scenario 3)
***Portfolio --- Expected Return -- Standard Deviation***
Risk-free --- 12% --- 30%
Market --- 8% --- 35%

Reference no: EM13540667

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