Under the Jensen approach, if the market rate of excess returns is 5.75%, a portfolio with beta of .9 should provide excess returns of:
A)5.175%.
B)4.5%.
C)5%.
D)There is not enough information to tell

Question

Quizplus · Accepted Answer

The Jensen approach calculates expected excess returns using the formula: Expected Excess Return = Beta * Market Excess Return. Here, 0.9 * 5.75% = 5.175%.

Under the Jensen Approach, If the Market Rate of Excess