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What Return Would Be Expected by an Investor Whose Portfolio

Question 83

Multiple Choice

What return would be expected by an investor whose portfolio was 25% market portfolio and 75% Treasury bills if the risk-free rate was 7% and the market risk premium was 8%?


A) 8.00%
B) 9.00%
C) 10.75%
D) 13.00% Expected return on market = rf + market risk premium
= 7% + 8%
= 15%
Rf = (.25 x .07) + (.75 x 15)
= 1) 75 + 11.25

Correct Answer:

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