Suppose that borrowing is restricted so that the zero-beta version of the capm holds. the expected return on the market portfolio is 17%, and on the zero-beta portfolio it is 5%. what is the expected return on a portfolio with a beta of 0.7?

The expected return on a portfolio with a beta of 0.7 is 13.4%.

A zero-beta portfolio is a portfolio that is constructed in such a way that its systematic risk or beta is zero.

A zero beta portfolio would have the same expected return as the risk-free rate.

In the given question, we can use the zero beta return in place of the risk free rate in the CAPM equation as follows:

Expected Rate of return = Rf + β (Rm - Rf)

Expected Return = 0.05+ 0.7(0.17-0.05) = 0.134 or 13.4%

the answer is "b.the increased supply will create a surplus. "

the essential thought behind price controls is straightforward - utilize the power of law to modify the equilibrium of a market. for instance, the legislature may choose that the steel business needs to survive, and in this way pass a law to set a value floor on steel. this implies all steel sold must offer at or over the floor value, which must be set over the equilibrium cost for it to have any impact. the switch could likewise happen - the administration can choose that steel is excessively costly and set a value roof underneath its equilibrium value, with the goal that all steel must be sold at or beneath that ceiling.