Expected Return: Discrete Distribution

The market and Stock J have the following probability distributions:

Probability	rM	rJ
0.3	16%	20%
0.4	9	7
0.3	19	13

a. Calculate the expected rate of return for the market. Round your answer to two decimal places. % b. Calculate the expected rate of return for Stock J. Round your answer to two decimal places. %

c. Calculate the standard deviation for the market. Do not round intermediate calculations. Round your answer to two decimal places. % e. Calculate the standard deviation for Stock J. Do not round intermediate calculations. Round your answer to two decimal places. %

Portfolio Required Return

Suppose you manage a $5.045 million fund that consists of four stocks with the following investments:

Stock	Investment		Beta
A	$440,000		1.50
B	625,000		-0.50
C	1,380,000		1.25
D	2,600,000		0.75

If the market's required rate of return is 9% and the risk-free rate is 7%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.