![AvreeanaS1379](/avatars/38855.jpg)
AvreeanaS1379
20.12.2019 •
Business
Consider the multifactor model apt with three factors. portfolio a has a beta of 0.8 on factor 1, a beta of 1.1 on factor 2, and a beta of 1.25 on factor 3. the risk premiums on the factor 1, factor 2, and factor 3 are 3%, 5% and 2%, respectively. the risk-free rate of return is 3%. the expected return on portfolio a is no arbitrage opportunities exist. a) 13.5% b) 13.4% c) 16.5% d) 23.0% e)none of the above
Solved
Show answers
More tips
- F Food and Cooking How to Make Mayonnaise at Home? Secrets of Homemade Mayonnaise...
- C Computers and Internet Which Phone is Best for Internet Surfing?...
- F Food and Cooking Everything You Need to Know About Pasta...
- C Computers and Internet How to Choose a Monitor?...
- H Horoscopes, Magic, Divination Where Did Tarot Cards Come From?...
- S Style and Beauty How to Make Your Lips Fuller? Ideas and Tips for Beautiful Lips...
- C Computers and Internet How to Learn to Type Fast?...
- A Art and Culture Who Said The Less We Love a Woman, the More She Likes Us ?...
Answers on questions: Business
- B Business Makers Corp. had additions to retained earnings for the year just ended of $174,000. The firm paid out $190,000 in cash dividends, and it has ending total equity of...
- B Business Select the adjective that answers what kind. i am a smart person who reads often and studies hard. smart hard often...
- H History Although roosevelt did not veto the neutrality acts of 1935 and 1937, he did not support them. why not? a. he believed that these acts would have the opposite intended...
- P Physics How do i find the ama of an inclined plane?i don t get how to calculate ama...
- C Chemistry Which metamorphic rock has a nonfoliated texture? gneiss slate schist quartzite...
- B Biology What is the difference between a community and a population? a.) a community has only one organism, while a population has many organisms. b.) a population has only...
- E English Once in a while the thought reiterated itself that it was very cold and that he had never experienced such cold. as he walked along he rubbed his cheekbones and nose...
- H History Technology to cause the industrial revolution. explain the effects of the industrial revolution on our society today. make it one paragraph....
- M Mathematics Can someone plz me with this problem....
- H History What major change in the united states occurred between civil war and the 1920s...
Ответ:
B) 13.4%
Explanation:
In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
The (Market rate of return - Risk-free rate of return) is also known as market risk premium
So, the expected return on portfolio A would be
= Risk free-rate of return + (Beta of factor 1 × risk premium + Beta of factor 2 × risk premium + Beta of factor 2 × risk premium)
= 3% + (0.8 × 3% + 1.1 × 5% + 1.25 × 2%)
= 3% + 2.4% + 5.5% + 2.5%
= 13.40%
Ответ:
Need points
Explanation:
Need points