Suppose that the CAPM holds and correctly priced all assets in the financial market. Consider the following probability distribution of returns on portfolio P and the market portfolio. State of Economy Probability Portfolio P Market
Boom 0.2 15% 10%
Normal 0.6 10% 6%
Bust 0.2 -5% 2%
a. Suppose that another well-diversified portfolio K has a beta of 1.5, and its standard deviation of the error term is zero. What are portfolio K's expected return and Treynor ratio?
b. Based on her risk preference, a rational mean-variance optimizing investor under the CAPM intends to have a target risk (i. e., standard deviation), which is only a half of that of the market portfolio. Determine the expected return for her (complete) portfolio.
c. Stock C has a beta of 0 and a return standard deviation of 6%. What is the minimum return standard deviation of a two-asset portfolio consisting of stock C and the market portfolio?

Read the overview below and complete the activities that follow.apartment complexes often look for ways to recruit new tenants and retain current tenants. although apartment complexes offer the tangible benefit of shelter to their tenants, many apartment complexes also offer additional services to tenants to encourage tenants to stay or to support the rent prices. the following scenario identifies the several service gaps of a company that runs an apartment complex as well as solutions for reducing these service gaps.concept review: customers have certain expectations about how a service should be delivered. a service gap occurs when the delivery of a service fails to meet customer expectations. there are four types of service gaps: knowledge gap, standards gap, delivery gap, and the communications gap. it is important for marketers to identify these gaps and develop strategies for minimizing them.match the example or solution to the appropriate service gap category.1. wait for repairs 5. train employees well2. understand expectations 6. incentives for tenants3. do not overpromise 7. family movie night4. empower employees 8. delayed lawn careservice gap example solutionknowledge gap standards gap delivery gap communication gap