1.Suppose the Security Market Line (SML) has vertical intercept 0.04 and slope 0.06. What is the required return on the market portfolio?

Stock

Investment

Beta

A

$200,000

1.2

B

$500,000

0.4

C

$300,000

0.8

2.Suppose you manage a $1 million fund that consists of three stocks with the following investments:

If the risk-free rate is 4% and the required rate of return on the market portfolio is 14%, what is the funds required rate of return?