What is expected return of the portfolio

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Reference no: EM133641469

Question

Over the next year horizon, the riskless rate is 4% and the expected equityrisk premium is 5%. A portfolio has a beta of 1.2.

1. What is the expected return of the portfolio according to the CAPM?

2. If the realized return of the market turned out to be 12%, and the portfolio had a 13% return, what was the alpha of the portfolio for the year?

Reference no: EM133641469

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