Expected return using CAPM
Not what you're looking for?
A mutual fund manager expects her portfolio to earn a rate of return of 11 percent this year. The beta of her portfolio is .8. If the rate of return available on risk-free assets is 4 percent and you expect the rate of return on the market portfolio to be 14 percent, should you invest in this mutual fund? Show your work and explain why or why not.
Purchase this Solution
Solution Summary
The solution explains how to calculate the expected return using the CAPM equation.
Solution Preview
In order to make the decision, we need to calculate the required return based on the beta. Using the CAPM ...
Purchase this Solution
Free BrainMass Quizzes
Balance Sheet
The Fundamental Classified Balance Sheet. What to know to make it easy.
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Introduction to Finance
This quiz test introductory finance topics.
Motivation
This tests some key elements of major motivation theories.
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.