What expected rate of return would security earn

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A portfolio that combines the risk-free asset and the market portfolio has an expected return of 7.3 percent and a standard deviation of 10.3 percent. The risk-free rate is 4.3 percent, and the expected return on the market portfolio is 12.3 percent. Assume the capital asset pricing model holds.

What expected rate of return would a security earn if it had a .48 correlation with the market portfolio and a standard deviation of 55.3 percent? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

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Reference no: EM131577437

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