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Business, 09.03.2020 19:10 cramirezorozco392

We Do Bankruptcies is a law firm that specializes in providing advice to firms in financial distress. It prospers in recessions wh other firms are struggling. Consequently, its beta is negative, -0.4.

a. If the interest rate on Treasury bills is 6% and the expected return on the market portfolio is 16%, what is the expected retur on the shares of the law firm according to the CAPM?
b. Suppose you invested 60% of your wealth in the market portfolio and the remainder of your wealth in the shares in the law firm. What would be the beta of your portfolio?

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