What is the expected return on the stock

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Q1) Assume that the risk-free rate, Rf = 5%; the expected rate of return on the market, E(Rm)= 11%; and that the standard deviation of returns on the market portfolio is σM =20%. Calculate the expected return and standard deviation of returns for portfolios that are 25%, 75%, and 125% invested in the market portfolio.

Q2). Suppose the return on the market is expected to be 15%, a stock has a β of 0.9, and the T-bill rate is 5%. What is the expected return on the stock?

Reference no: EM132700903

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