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 percent with a standard deviation of 13 percent and a beta of 1.3. The market risk premium for this period of time was 6 percent, and the risk-free rate of return was 5 percent.
-Refer to Exhibit 7.6. Based on the Capital Asset Pricing Model (CAPM), what is the required rate of return for this portfolio?
A) 6.3 percent
B) 7.8 percent
C) 10.6 percent
D) 12.8 percent
E) 15.4 percent

Question

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The Answer of 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 percent with a standard deviation of 13 percent and a beta of 1.3. The market risk premium for this period of time was 6 percent, and the risk-free rate of return was 5 percent.
-Refer to Exhibit 7.6. Based on the Capital Asset Pricing Model (CAPM), what is the required rate of return for this portfolio?
A) 6.3 percent
B) 7.8 percent
C) 10.6 percent
D) 12.8 percent
E) 15.4 percent