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What is the expected return on the shares of the law firm

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We do bankruptcies specializes in providing advice to firms in financial distress. it prospers in recessions when other firms are struggling. consequently, its beta is negative, -.2. (l02)

Problem a. If the interest rate on treasury bills is 4% and the expected return on the market portfolio is 14%, what is the expected return on the shares of the law firm according to the CAPM?

Problem b. Suppose you invested 70% of your wealth in the market portfolio and the remainder of your wealth in the shares in the law firm. What would be the beta of your portfolio?

Reference no: EM132992741

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