Risk-free rate of interest

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Question

Suppose that the risk-free rate of interest is 0.04 and the expected rate of return on the market portfolio is 0.16. The standard deviation of the market portfolio is 0.12.

a. What is the Sharpe ratio of the market portfolio?

b. According to the CAPM, what is the efficient way to invest with an expected rate of return of 0.12?

Reference no: EM133674220

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