Assume that the risk-free rate is 9% and that the market portfolio has an expected return of 17%.Under equilibrium conditions as described by the CAPM,what would be the expected return for a portfolio having no diversifiable risk and a beta of 0.75?

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Quizplus · Accepted Answer

The expected return can be calculated using the Capital Asset Pricing Model (CAPM) formula: Expected Return = Risk-Free Rate + Beta * (Market Return - Risk-Free Rate). Plugging in the given values: Expected Return = 9% + 0.75 * (17% - 9%) = 9% + 0.75 * 8% = 9% + 6% = 15%.

Assume That the Risk-Free Rate Is 9% and That the Market