I was solving Schweser Practice Question - Book 5 - Page 279 - Question 3, The expected reurn is 10.8 %. I think it should be 9.6 % (0.4 * 6 + 0.6 * !2)
Regards
KK
KK, you need the expected return on portfolio Y. The trick is to note that all portfolios on the same line have the same sharpe ratio, i.e., all those on CML have same slope. Look at Z which is on the line. Here you can easily calculate Z’s Sharpe ratio, 18%-6%/30% = 0.40. Then Y’s Sharpe ratio is X-6%/20%, solve for X, whic equals 14%.