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You are given the opportunity to invest in a well-diversified portfolio with expected return of 12%...

You are given the opportunity to invest in a well-diversified portfolio with expected return of 12% and beta of 1.5. The risk-free rate is 2% and the market risk premium is 8%. Should you invest?

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Answer #1

IIn this case te returns are not 12% according to CAPM returns are 11% according to the given information . In my opinion if i was an investor this aint a good return compared to the market value and returns which we are obtaining in different investments . But in this case with low risk factor it is a good return . We have to take high returns we have to take high risks.

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