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Assume the CAPM Is the Correct Asset Pricing Model,and the Risk-Free

question 12

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Assume the CAPM is the correct asset pricing model,and the risk-free rate of return is 6% and the market has an expected return and a standard deviation of 16% and 0.10%,respectively.An investor has a portfolio consisting of equal amounts in assets A and B.Asset A has an expected return of 8%.If the portfolio has an expected return of 10%,what is the covariance between asset B and the market portfolio?


Definitions:

Fetal Abnormalities

Conditions that deviate from the normal development of a fetus, which can be structural, functional, or genetic.

Development

The process of growth or improvement over time, often used in context of countries, individuals, or technologies.

Low-Birth-Weight Infant

A term describing babies born with a weight of less than 2500 grams (5 pounds, 8 ounces), often due to premature birth or nutritional issues during pregnancy.

Birth

The act or process of bearing or bringing forth offspring from the womb, marking the beginning of a new individual's life outside the mother's body.

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