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Calculate the expected rate of return on a securitya

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Reference no: EM132569631

Assume that a particular fund consists of two assets i.e. Treasury bills and the market portfolio. This fund's expected rate of return is 07 percent with a standard deviation of 10 percent. The rate of returns on T-bill and the market portfolio is 4 percent and 12 percent respectively. In this investment, CAPM model holds. Calculate the expected rate of return on a security that has a correlation of 0.45 with the market portfolio with the standard deviation of 0.55?

Reference no: EM132569631

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