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The market portfolio has a beta of _________
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- What must be the beta of a portfolio with E(rP) = 18%, if rf= 6% and E(rM) = 14%?Portfolio beta is a weighted average of the component betas. Question 32 options: a) True b) FalseAccording to CAPM, the expected rate of return of a portfolio with a beta of 1.0 and an alpha of 0 is:a. Between rM and rf .b. The risk-free rate, rf .c. β(rM − rf).d. The expected return on the market, rM.
- According the picture, Find:a) the expected return and standard deviation on this portfolio. b) the expected return on the market using portfolio beta if Rf=5%.The following portfolios are being considered for investment. During the period under consideration, RFR = 0.07.Portfolio Return Beta σiA 0.15 1.0 0.05B 0.20 1.5 0.10C 0.10 0.6 0.03D 0.17 1.1 0.06Market 0.13 1.0 0.04 a. Compute the Sharpe measure for each portfolio and the market portfolio. b. Compute the Treynor measure for each portfolio and the market portfolio. c. Rank the portfolios using each measure, explaining the cause for any differences you find in the rankings.Consider the following information for four portfolios, the market, and the risk-free rate (RFR): Portfolio Return Beta SD A1 0.15 1.25 0.182 A2 0.1 0.9 0.223 A3 0.12 1.1 0.138 A4 0.08 0.8 0.125 Market 0.11 1 0.2 RFR 0.03 0 0 Refer to Exhibit 18.6. Calculate the Jensen alpha Measure for each portfolio. a. A1 = 0.014, A2 = -0.002, A3 = 0.002, A4 = -0.02 b. A1 = 0.002, A2 = -0.02, A3 = 0.002, A4 = -0.014 c. A1 = 0.02, A2 = -0.002, A3 = 0.002, A4 = -0.014 d. A1 = 0.03, A2 = -0.002, A3 = 0.02, A4 = -0.14 e. A1 = 0.02, A2 = -0.002, A3 = 0.02, A4 = -0.14
- What is the alpha of a portfolio with a beta of 2, an actual return of 22%, market- return of 12%, and a risk-free rate of 5%? on excelConsider following information on a risky portfolio, risk-free asset and the market index. What is the M2 of the risky portfolio? Risky portfolio Risk-free asset Market index Average return 8.2% 2% 6% Std. Dev. 26% 20% Residual std. dev. 10% Alpha 1.4% Betachoose which one ? 3.Assume CAPM holds. What is the correlation between an efficient portfolio and the market portfolio?a.1b.-1c.0d.Not enough information
- Which of the following will be a part of Efficient Frontier? A B C D E F Return (%) 8 8 12 4 9 8 Risk (Standard deviation) 4 5 12 4 5 6 Plot them in Risk return graph. Assuming correlation between A and C as 0.3, find the risk and return of the portfolio with 75 % proportion in A and 25 % in C, also interpret the result of such diversification.A small market consists of three stocks, A, B, and C. and their financial data and projection are presented below. Assume CAPM holds. Find: a) the expected return and standard deviation on this portfolio. b) the expected return on the market using portfolio beta if Rf=5%.A small market consists of three stocks, A, B, and C. and their financial data and projection are presented below. Assume CAPM holds. Find: a) the expected return and standard deviation on this portfolio. b) the expected return on the market using portfolio beta if Rf=5%. Please answer Part b!