6. copy.docx - Portfolio A WOW CAPM = E(Ri = 0.03(0.39 –...

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Portfolio A: WOW: CAPM = E(Ri) = 0.03 + (0.39 – 0.03) × 0.94 = 0.03 + 0.3384 = 0.3684 = 36.84% RIO: CAPM = E(Ri) = 0.03 + (0.39 – 0.03) × 1.31 = 0.03 + 04716 = 0.5016 = 50.16% QBE: CAPM = E(Ri) = 0.03 + (0.39 – 0.03) × 0.56 = 0.03 + 0.2016 = 0.2316 = 23.16% Portfolio B: WOW: CAPM = E(Ri) = 0.03 + (0.27 – 0.03) × 0.94 = 0.03 + 0.2256 = 0.2556 = 25.56% RIO: CAPM = E(Ri) = 0.03 + (0.27 – 0.03) × 1.31
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