Exhibit 8.6 Use the Information Below for the Following Problem(S)

question 25

Multiple Choice

Exhibit 8.6
Use the Information Below for the Following Problem(S)
Jonathan Crowley is a portfolio manager for a large pension fund. Last year his portfolio had an actual return of 12.6% with a standard deviation of 13% and a beta of 1.3. The market risk premium for this period of time was 6% and the risk-free rate of return was 5%.
-Refer to Exhibit 8.6.Based on the Capital Asset Pricing Model (CAPM) ,what is the required rate of return for this portfolio?

• A) 6.3%
• B) 7.8%
• C) 10.6%
• D) 12.8%
• E) 15.4%

---

Definitions:

Alcoholism

A chronic disease characterized by uncontrolled drinking and preoccupation with alcohol, often leading to physical dependence and negative health, social, and behavioral effects.

Depression

a common and serious mood disorder causing persistent feelings of sadness, hopelessness, and loss of interest in activities.

Close Relatives

Family members who are directly related by blood or marriage, such as parents, siblings, and children.

Panic Disorder

A mental health condition characterized by sudden and repeated episodes of intense fear accompanied by physical symptoms.