mutual fund

Part A) a mutual fund with beta of .8 has an expected rate of return of 14%. If the risk free rate =5%, and you expect the rate of return on the market portfolio to be 15%, should you invest in this fund? What is the fund’s alpha?

 

Part B) What passive portfolio comprised of a market-index portfolio and a money market account would have the same beta as the fund? Show that the difference between the expected rate of retun on this passive portfolio and that of the fund equals the alpha from part a.

 
Looking for solution of this Assignment?

WHY CHOOSE US?

We deliver quality original papers

Our experts write quality original papers using academic databases.  

Free revisions

We offer our clients multiple free revisions just to ensure you get what you want.

Discounted prices

All our prices are discounted which makes it affordable to you. Use code FIRST15 to get your discount

100% originality

We deliver papers that are written from scratch to deliver 100% originality. Our papers are free from plagiarism and NO similarity

On-time delivery

We will deliver your paper on time even on short notice or  short deadline, overnight essay or even an urgent essay