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    Portfolio Management

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    You observe two portfolios HG and VL with betas of 1.20 and 0.50 and expected return of 9% and 5.5% respectively.

    a. Calculate the risk free rate and the market risk premium. Write the SML function

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    Solution Preview

    a. Calculate the risk free rate and the market risk premium. Write the SML function

    In case of HG,
    Beta=b=1.20
    Risk free rate=rf=?
    Expected return=r=9%
    Market risk ...

    Solution Summary

    The solution describes the steps to calculate risk free rate, market risk premium and SML function in the given case.

    $2.19

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