Portfolio Management Q114
| Investor | Expected Standard Deviation | Beta |
| Daniel | 30 | 1.60 |
| David | 25 | 1.80 |
| Diana | 20 | 1.40 |
Given that the expected market risk return is7% and the risk-free rate is 2.5%, what is the expected return for Daniel’s security?
- Option : B
- Explanation : The expected return can be calculated using the following equation: E (Ri)= Rf+ β (E (Rm) −Rf) E (Ri)= 2.5% + 1.60 (7%−2.5%)= 9.7%
