Question
1- Portfolio beta: A mutual fund manager has a $20 million portfolio with a beta of 1.15. The risk-free rate is 6.75%, and the market
1- Portfolio beta:
A mutual fund manager has a $20 million portfolio with a beta of 1.15. The risk-free rate is 6.75%, and the market risk premium is 4.0%. The manager expects to receive an additional $5 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 15%. What should be the average beta of the new stocks added to the portfolio? Do not round intermediate calculations. Round your answer to two decimal places. Enter a negative answer with a minus sign.
2- Expected and required rates of return
Assume that the risk-free rate is 7% and the market risk premium is 4%.
- What is the required return for the overall stock market? Round your answer to two decimal places .(11)
- What is the required rate of return on a stock with a beta of 1.1? Round your answer to two decimal places.
3- Required rate of return
Assume that the risk-free rate is 6% and the required return on the market is 13%. What is the required rate of return on a stock with a beta of 1.2? Round your answer to two decimal places
4- Portfolio beta
An individual has $10,000 invested in a stock with a beta of 0.8 and another $55,000 invested in a stock with a beta of 1.8. If these are the only two investments in her portfolio, what is her portfolio's beta? Round your answer to two decimal places
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