A market portfolio has an expected return of 10% and standard deviation of 20%. The risk-free rate is 4%. What is the expected return?
2006-11-20 00:57:06 · 3 answers · asked by hotteenick 3 in Business & Finance ➔ Investing
I suppose you want the return for a stock. Then the formula to use is:
r = R_f + beta x ( R_m - R_f )
where
R_m is the market return
R_f is the risk free rate
beta = standard deviation stock/standard deviation market
Conclusion: there is an information lacking....
2006-11-20 20:59:58 · answer #1 · answered by cordefr 7 · 0⤊ 0⤋
Why are you asking what the expected return would be? You already said the expected return is 10%.
2006-11-20 13:01:03 · answer #2 · answered by Randy H 4 · 0⤊ 1⤋
Ok, this is obviously homework.
I have forgotten how to do it. Ha!
2006-11-20 09:54:23 · answer #3 · answered by floozy_niki 6 · 0⤊ 1⤋