I need to see intermediate steps and forumulas.
Beta and CAPM
Suppose the risk free rate is 6.3% and the market portfolio has an expected return of 14.8%. The market portfolio has a variance of .0498. Portfolio Z has a correlation coefficient with the market of .45 and a variance of .1783. According to CAPM, what is the expected return on portfolio Z?
In order to calculate the expected return on portfolio Z, we need to calculate the beta of the portfolio.
The formula to calculate the beta ...
The solution explains how to determine the expected return on portfolio.