EE eBook 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 A $160 million 0.8 B 120 million 1.2 80 million 2.0 D 80 million 1.0 E 60 million 1.7 Kish's beta coefficient can be found as a weighted average of its stocks' betas. The risk-free rate is 3%, and you believe the following probability distribution for future market returns is realistic: Probability Market Return 0.1 -24% 0.2 0 0 0.4 11 0.2 30 0.1 46 a. What is the equation for the Security Market Line (SML)? (Hint: First determine the expected market return.) 1. n = 3.0% + (9.6%) II. n = 6.4% + (9.1%) III. n = 3.0% + (10.3%) IV. n = 1.2% + (9.6%)b V. n = 1.2% + (10.3%) -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 16%, and its estimated beta is 1.5. 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. %