Calculate the expected return of portfolio A with a beta of .pdf
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Byte of Accounting, Inc.General JournalNeed help with 27 through.pdf
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Calculate the expected return of portfolio A with a beta of .pdf
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Calculate the expected return of portfolio A with a beta of 1.8. (Round your answer to 2 decimal places.) What is the alpha of portfolio A. (Negative value should be indicated by a minus sign.Round your answer to 2 decimal places.) Consider the following information: Solution a. expected return = Rf + beta [ Rm - Rf] = 0.07 + 1.8 [ 0.11 - 0.07 ] = 0.07 + 1.8 [0.04] = 0.07 + 0.072 = 0.142 or 14.2% b. Alpha means excess of rate of return Alpha = Rf + beta [ Rm - Rf] - expected return = 0.07 + 1.8 [ 0.11 - 0.07] - 0.142 = 0.142 - 0.142 = 0 Alpha is negative , the performance criteria revealsthat manger has not shown strong market timing skills. c. Yes, CAPM is valid the above situation..
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Calculate the expected return of portfolio A with a beta of .pdf
- Calculate the expected return of portfolio A with a beta of 1.8. (Round your answer to 2 decimal places.) What is the alpha of portfolio A. (Negative value should be indicated by a minus sign.Round your answer to 2 decimal places.) Consider the following information: Solution a. expected return = Rf + beta [ Rm - Rf] = 0.07 + 1.8 [ 0.11 - 0.07 ] = 0.07 + 1.8 [0.04] = 0.07 + 0.072 = 0.142 or 14.2% b. Alpha means excess of rate of return Alpha = Rf + beta [ Rm - Rf] - expected return = 0.07 + 1.8 [ 0.11 - 0.07] - 0.142 = 0.142 - 0.142 = 0 Alpha is negative , the performance criteria revealsthat manger has not shown strong market timing skills. c. Yes, CAPM is valid the above situation.