Can anyone help me with this Problem for a Portfolio Management class?

FIN530 - PORTFOLIO MANAGEMENT

PROBLEMS 2

CAPITAL ASSET PRICING MODEL

(CAPM)

Consider:

● U.S. Treasury bill = 6%

● Market expected rate of return = 10%

Calculate:

1)The expected market risk premium, 2)the expected portfolio risk premium, and 3)the expected portfolio rate of return for each of the following cases in which the portfolio is bearing each of the following risks: a) 0.0

b) 0.5

c) 1.0

d) 1.5

e) 2.0

Suppose the risk-free rate is 4% , the market expected risk premium is 8.6%, and a particular stock has a beta of 1.3. Based on the CAPM: a) What is the expected return on this stock?

b) What is the expected return of the stock if the beta were to double?

INSTRUCTIONS

1. This assignment may be prepared and submitted individually or in a group (no more than 5 students per group).

2. APA style (cover, page number, indent, line spacing). See: https://apastyle.apa.org

3. Answers must follow the same order requested. Questions must be

included.

4. Total pages: no more than four (4).

5. Only one submission per group.

6. Deadline: Friday 10/16/2020, before 9:00 pm., through Google Classroom assignment. No exceptions.