Thread: 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?

yep.

thanks , this is the continuation of the question.

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