CAPM Questions

Questions

What is the efficient frontier?

What is the capital market line?

What is the security market line?

The market expected return is 7.5% and the risk-free rate is 1%. Apple has a correlation with the market of 0.10 and a variance of 0.0100. The market’s standard deviation is 9%. What is Apple’s expected return?

Apple and the market have Sharpe ratios of 0.35 and 0.50. What is the correlation between Apple and the market?

Apple’s expected return is 10% and has a beta of 1.4. The market risk premium is 6%. What is the risk-free rate?

Apple and the market have a correlation of 0.8 and a beta of 0.67. The market’s risk premium and Sharpe ratio are 6.5% and 0.43. What is the variance of Apple?