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Using the Formula for the Capital Market Line If the Risk-Free

Question 69

Essay

Using the formula for the capital market line if the risk-free rate (Rf)is 7 percent,the market rate of return (Km)is 12 percent,the market standard deviation (sm)is 6 percent,and the standard deviation of the portfolio (sp)is 15 percent,compute the anticipated return (Kp).

Correct Answer:

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Kp= Rf+ Km-Rfsp (sm-O)=7% + 12...

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