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Ch7 Q7.7

J

Jesoos

Member
In the solution to Q7.7 they explain that price of Portfolio 3 would be driven down (and exp return up) and prices of Portfolio 1 and 2 up (exp returns down)...

If the price of a portfolio is driven up, why does the expected return go down? If an investor pays more for a portfolio, does he then not expect a greater return from this portfolio?

Thanks!
 
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