An analyst gathers the following information:
- Risk-free rate: 2%
- Expected return of the market portfolio: 10%
- Standard deviation of the market portfolio: 20%
- Standard deviation of the security: 35%
- Correlation between the security and the market: 0.8
According to the Capital Asset Pricing Model (CAPM), the expected return of the security is closest to: | Chartered Financial Analyst Level 1 Quiz - LeetQuiz
Chartered Financial Analyst Level 1
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An analyst gathers the following information:
Risk-free rate: 2%
Expected return of the market portfolio: 10%
Standard deviation of the market portfolio: 20%
Standard deviation of the security: 35%
Correlation between the security and the market: 0.8
According to the Capital Asset Pricing Model (CAPM), the expected return of the security is closest to: