Find what is expected return for wayne enterprises

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Problem 1: The risk-free rate is 2% and the expected return on the market is 8%. Wayne Enterprises has a beta of 1.5. What is the expected return for Wayne Enterprises according to the CAPM?

a) 10.0%
b) 11.0%
c) 12.0%
d) 10.5%

Problem 2: You want to build a two-asset portfolio which includes the risk-free asset and the market portfolio. You want the portfolio to have an expected return of 7%. The expected return on the risk-free asset is 4% and the expected return on the market is 10%. What is the portfolio weight on the market portfolio?

a) 0.25
b) 0.50
c) 0.90
d) 0.75

Problem 3: A mutual fund manager expects her portfolio to earn a rate of return of 13.125% this year. The fund has a beta of 1.75. The risk-free rate is 4.5% and the expected return on the market is 10%. Should you invest in her mutual fund?

a) no
b) yes
c) not enough information

Reference no: EM132993484

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