a.
Adequate information:
Market expected return [E(RM)] = 11.5% or 0.115
Market standard deviation (σM) = 19% or 0.19
Risk-free rate (Rf) = 1.4% or 0.041
Standard deviation of portfolio (σp) = 9% or 0.09
To compute: Expected return on the portfolio.
Introduction: Expected return on the portfolio refers to the return that is anticipated on the portfolio as a whole.
b.
Adequate information:
Market expected return [E(RM)] = 11.5% or 0.115
Market standard deviation (σM) = 19% or 0.19
Risk-free rate (Rf) = 1.4% or 0.041
Expected return of portfolio [E(RP)] = 20% or 0.20
To compute: Standard deviation on the portfolio
Introduction: The standard deviation on the portfolio measures the risk or inherent volatility of an investment.
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