1. =0.098/9.

8%

ri = rRF + (rm - rRF) bi

21%=rRF+(13%-rRF)3.5

0.098/9.8% = rRF

2. 4.8%

22% = 10% + (RPm)2.5

22%-10% = 25 RPm

12%/2.5 = 25Rpm/2.5
RPM = 0.048 or 4.8%

3 3.4%

4 r = 3% + 3.2% + 0.9%
IP0 = 5% + 3% (9) / 10
=0.032 or 3.2%
0.120(10-1)= 0.9%
IP5 = 5% + 3%(4)/5
=0.034 or 3.4%
5
6
7.4% = 2.70% + IP4 + 0.3% +0.9%
IP4 = 0.035 or 3.5%
IP7 = 3.5%(4) + 5%(3) / 7
IP7 = 0.04143 or 4.143%

7. A. 0.1913 or 19.13%

B. 1.4715

A. Standard Deviation
0.0366
Expected rate of return - (0.2)(.4)+(0.6)(0.15)+(0.2)(-.20) = 13%

Standard Dev/Coefficient
B. 19.13%/0.13

8. 4,584.54

9.
10 2.34%
11. A. 0.7625/76.25% B. 12.10%

a) What is the portfolio beta?

b = (10%)(1.5) + (15%)(-0.5) + (25%)(1.25) + (50%)(0.75)

b = 0.7625/76.25

b) What is the portfolio required rate of return?

Kj = 6%+(14%-6%)(76.25)
Kj = 12.10%
12. 105%