Answer to Question #6128 in Economics of Enterprise for Lamarcus Streeter
a. Portfolio P has a standard deviation of 20%.
b. The required return on Portfolio P is equal to the market risk premium (rM − rRF).
c. Portfolio P has a beta of 0.7.
d. Portfolio P has a beta of 1.0 and a required return that is equal to the riskless rate, rRF.
e. Portfolio P has the same required return as the market (rM).
Because the average Beta will be (1.3 + 0.7)/2 = 1, Return = Beta*(rM − rRF)
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