What is the expected return of aapl

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Suppose the assumptions behind the Capital Asset Pricing Model hold. The risk-free rate is 2% and the expected market return is 9%. The standard deviation of the market portfolio is 15%. Apple Inc. (AAPL) has a beta of 1.4 and a standard deviation of 35%.

a. What is the expected return of AAPL?

b. What fraction of the total risk of AAPL is idiosyncratic?

c. Suppose that the standard deviation of your optimal portfolio is 18%. What is its expected return?

Reference no: EM132828491

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