Google Answers: Portfolio Combines Risk-Free Assets

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Q: Portfolio Combines Risk-Free Assets ( No Answer, 0 Comments )

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Subject: Portfolio Combines Risk-Free Assets
Category: Reference, Education and News > Homework Help
Asked by: bgs75-ga
List Price: $2.50

Posted: 25 Jul 2005 12:21 PDT
Expires: 24 Aug 2005 12:21 PDT
Question ID: 547715

A portfolio that combines the risk-free asset and the market porfolio
has an expected return of 25% and a standard deviation of 4 percent. 
The risk-free rate is 5 percent, and the expected return on the market
portfolio is 20%.  Assume the CAPM holds.  What expected rate of
return would a security earn if it had a .5 correlation with the
market portfolio and a standard deviation of 2%?

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