A portfolio consists of an index mutual fund which represents the overall market and Treasury bills.The fund has a portfolio weight of 60%.The risk-free rate is 3.2% and the market risk premium is 7.6%.What is your best estimate of the portfolio expected rate of return?
A) 8.39%
B) 7.76%
C) 10.80%
D) 9.02%

Question

Quizplus · Accepted Answer

E(R)_Portfolio = (1 − 0.6)(3.2%) + (0.6)[3.2% + 1(7.6%)] = 7.76%

A Portfolio Consists of an Index Mutual Fund Which Represents