A mutual fund manager expects her portfolio to earn a rate of return of 14% this year. The beta of her portfolio is .9. Assume rate of return available on risk-free assets is 6% and you expect the rate of return on the market portfolio to be 16%.

a.	Calculate the expected rate of return that investors will demand of the portfolio.

Expected rate of return

%

b.

Should you invest in this mutual fund?

	No
	Yes 1.Micro Spinoffs, Inc., issued 20-year debt a year ago at par value with a coupon rate of 9%, paid annually. Today, the debt is selling at $1,020. If the firm