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I stumbled upon this questionn and answer on the forum. Can someone pls explain why the variance is being raised to the power of *2*

28.1 Assume the riskfree rate is 4% and the expected (overall) market return is 12% with 20% volatility. Our portfolio (P) has volatility of 30% and a correlation with the market of 0.4. According to CAPM, what is the portfolio's expected return?

beta = cov(P,M)/variance(M) = (20%*30%*0.4)/20%^2 = 0.6

CAPM says E(P return) = 4% + 0.6*(12%-4%) = 8.8%

28.1 Assume the riskfree rate is 4% and the expected (overall) market return is 12% with 20% volatility. Our portfolio (P) has volatility of 30% and a correlation with the market of 0.4. According to CAPM, what is the portfolio's expected return?

beta = cov(P,M)/variance(M) = (20%*30%*0.4)/20%^2 = 0.6

CAPM says E(P return) = 4% + 0.6*(12%-4%) = 8.8%

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