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Math Help - investment portfolio

  1. #1
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    investment portfolio

    Adam invests his savings of $10000 and $ 5000 in which he borrows from a bank at 5% interest in a broad portfolio of stocks that approximates the market portfolio. The market return is estimated to be 12% per annum. Assume borrowing and lending rates are equal.

    Calculate her expected return using the CAPM equation.

    Return = risk free rate + Beta (Market return - risk free rate)
    = 5% + 1 (12% - 5%)
    = 12%

    Am i right?
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  2. #2
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    Re: investment portfolio

    yep.
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  3. #3
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    Re: investment portfolio

    thanks , this is the continuation of the question.

    What is the expected volatility of adam portfolio if the market portfolio is 18% per annum?
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