A mutual fund manager expects her portfolio to earn a rate, Financial Management

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A mutual fund manager expects her portfolio to earn a rate

A mutual fund manager expects her portfolio to earn a rate of return of 14% this year. The beta of her portfolio is .8. Assume rate of return available on risk-free assets is 7% and you expect the rate of return on the market portfolio to be 17%.

a. Calculate the expected rate of return that investors will demand of the portfolio.

Expected rate of return %

b. Should you invest in this mutual fund?

Yes

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