0.8 B 1.2 C You plan to invest in the Kish Hedge Fund, which has total capital of $500 million invested in five stocks: Stock Investment Stock's Beta Coefficient $160 million 120 million 80 million 2.1 80 million 1.0 E 60 million 1.9 Kish's beta coefficient can be found as a weighted average of its stocks' betas. The risk-free rate is 4%, and you believe the following probability distribution for future market returns is realistic: Probability Market Return -30% D 0.1 0.2 0 0.4 14 0.2 31 0.1 48 a. What is the equation for the Security Market Line (SML)? (Hint: First determine the expected market return.) I. r; = 3.5% + (9.6%)b; II. r; = 3.6% + (9.5%) III. r; = 4.0% + +(9.6%); IV. r; = 4.5% + (11.1%)b; V. r; = 4.0% + (9.5%)b -Select- b. Calculate Kish's required rate of return. Do not round intermediate calculations. Round your answer to two decimal places. % C. Suppose Rick Kish, the president, receives a proposal from a company seeking new capital. The amount needed to take a position in the stock is $50 million, it has an expected return of 15%, and its estimated beta is 1.4. Should Kish invest in the new company? The new stock -Select- be purchased. At what expected rate of return should Kish be indifferent to purchasing the stock? Round your answer to two decimal places. %