Currently the rate of return of the risk-free government bond is 3% while the expected rate of return on the market is 11%. Using CAPM, calculate the rate of return required for A plc who has a beta of 0.8 and B plc who has a beta of 1.35. If you create a portfolio with 40% of funds in A plc and the remainder in B what return would you expect?

Currently the rate of return of the risk-free government bond is 3% while the expected rate of return on the market is 11%. Using CAPM, calculate the rate of return required for A plc who has a beta of 0.8 and B plc who has a beta of 1.35. If you create a portfolio with 40% of funds in A plc and the remainder in B what return would you expect?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 4P

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