00:01
So we will analyze the given information step by step.
00:04
So the given filter single vector module for the rate of return ri to e to the power ri plus beta is minus fb.
00:24
So er is the expected return rate of the individual asset i.
00:31
Bi is the asset beta.
00:33
And f is the factory return.
00:37
B is the expected return of the risk -free asset.
00:42
So for a, find the rate of return of the risk -free asset b here.
00:52
We can use the vector, the covariance between the vector and the asset is zero.
01:00
So the covariance of f and i is b zero.
01:06
So the risk -free beta risk -free would be zero.
01:15
So the equation for the risk -free asset in the single vector module becomes r risk -free equals e r risk -free.
01:38
Since beta risk -free equals zero, the rate of return of the risk -free asset is equal to its expected rate of return...