Assume that the return and standard deviation of the market


Use the following information on the next two questions. Assume that the return and standard deviation of the market portfolio is 12% and 20%, respectively. Also assume that the risk-free rate is 3%. You decide to create a portfolio comprising the risk-free asset and the market portfolio. You want the portfolio to have a standard deviation of 25%. Find the expected return of your portfolio according to the CML.

.1825

.1725

.102

none of the above

Find the weight of the market portfolio in your portfolio.

80%

125%

158.33%

none of the above

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Financial Management: Assume that the return and standard deviation of the market
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