Homework Answers
Expected Ret (CAPM ret ) = Risk Free Rate + Beta ( Market Ret - Risk Free Rate)
= 7% + 0.9 ( 13% - 7%)
= 7% + 0.9(6%)
= 7% + 5.4%
= 12.4%
Alpha of Portfolio A = Expected Ret - CAPm Ret
= 11% - 12.4%
= -1.4%
Pls comment, if any further assistance is required.
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