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Use the following information about the market portfolio M, portfolios A and B, and the risk-free rate rate-asset F to answer the following question. Consider each question independently. Expected return (%) Standard deviation beta Market portfolio, M 12 18 Portfolio A 14 30 Portfolio B 15 1.20 Risk-free asset, F 6 If the CAPM is valid, is the situation for portfolio A possible? A. yes B. no, because the beta for portfolio A is not known C. no, because the expected return for portfolio A is greater than the expected return for M.

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Financial Management, Finance

Category:- Financial Management
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