Explanation of expected rate of return

Reference no: EM1333230

A portfolio that combines the risk-free asset and the market portfolio has an expected return of 22 percent and a standard deviation of 5 percent. The risk-free rate is 4.9 percent, and the expected return on the market portfolio is 19 percent. Assume the capital-asset-pricing model holds.

Question: What expected rate of return would a security earn if it had a 0.6 correlation with the market portfolio and a standard deviation of 3 percent?

Reference no: EM1333230

Questions Cloud

What training and development programs help companies : What training and development programs help companies the most in a struggling economy and Give an example of how the training will help

Major approaches to individual decision making : Explain the three major approaches to individual decision making (the rational-economic model, the administrative model, and image theory).

Discuss what has occurred to change the demand for : Discuss what has occurred to change the demand for, or the supply of, the good or service, and market prices of those products or services.

Relevance to recruitment and staffing : Check two current issues about the role and value of credit and criminal background check and its relevance to recruitment and staffing.

Explanation of expected rate of return : What expected rate of return would a security earn if it had a 0.6 correlation with the market portfolio and a standard deviation of 3 percent?

Strategic thinking : "Strategic thinking is gaining popularity in organizational planning." Why do you think that is?

Grading form to use for supervisors at a call center : Prepare a grading form to use for supervisors at a call center - Rarely held department meetings and poor verbal communication skills

Describing theory of interest and decision-making concept : Describe the theory of interest and discuss the decision-making concept it applies to in analyzing cost and return on long-term investment.

Outline the extent to that you expect regional economic : Outline the extent to that you expect regional economic integration to occur in Europe, Asia.

User Account

All Pages