Answer:
the expected return is 6.8%
Explanation:
The computation of the expected return is shown below:
= Half basis × expected return + half basis × risk-free asset
= 0.5 × 11% + 0.5 × 2.6%
= 5.5% + 1.3%
= 6.8%
hence, the expected return is 6.8%
We simply applied the above formula so that the correct value could come
And, the same is to be considered
