The expected return for the market is 12 percent,with a standard deviation of 20 percent.The expected risk-free rate is 8 percent.Information is available for three mutual funds,all assumed to be efficient,as follows:
$$\begin{array} { l c }
\text { Mutual Funds } & \operatorname { SD } ( \% ) \
\hline \text { Affiliated } & 15 \
\text { Omega } & 17 \
\text { Ivy } & 19
\end{array}$$ (a)Based on the CML,calculate the market price of risk.
(b)Calculate the expected return on each of these portfolios.

Question

The expected return for the market is 12 percent,with a standard deviation of 20 percent.The expected risk-free rate is 8 percent.Information is available for three mutual funds,all assumed to be efficient,as follows:
 $$\begin{array} { l c } 
\text { Mutual Funds } & \operatorname { SD } ( \% ) \
\hline  \text { Affiliated } & 15 \
\text { Omega } & 17 \
\text { Ivy } & 19
\end{array}$$ (a)Based on the CML,calculate the market price of risk.
(b)Calculate the expected return on each of these portfolios.

Quizplus · Accepted Answer

The Answer of The expected return for the market is 12 percent,with a standard deviation of 20 percent.The expected risk-free rate is 8 percent.Information is available for three mutual funds,all assumed to be efficient,as follows:
 $$\begin{array} { l c } 
\text { Mutual Funds } & \operatorname { SD } ( \% ) \
\hline  \text { Affiliated } & 15 \
\text { Omega } & 17 \
\text { Ivy } & 19
\end{array}$$ (a)Based on the CML,calculate the market price of risk.
(b)Calculate the expected return on each of these portfolios.

The Expected Return for the Market Is 12 Percent,with a Standard