Answered step by step
Verified Expert Solution
Question
1 Approved Answer
David is the money manager of a R4,000,000 investment fund. The fund consists of four shares with the following investments and betas: Share Share Investment
David is the money manager of a R4,000,000 investment fund. The fund consists of four shares with the following investments and betas:
Share
Share | Investment | Beta |
A | R400,000 | 1,50 |
B | R600,000 | -0,50 |
C | R1,000,000 | 1,25 |
D | R2,000,000 | 0,75 |
If the market required rate of return is 14% and the risk-free rate is 6%, what is the fund's required rate of return?
1. 6%
2. 8%
3. 12%
4. 14%
Please provide the answer and calculation, thanks so much.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started