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(i) Zam Mutual Fund a broad - based fund of stocks and other securities with an expected return of 15% and a volatility of 20%.
(i)Zam Mutual Fund a broad - based fund of stocks and other securities with an expected return of 15% and a volatility of 20%. Currently, the risk-free rate of interest is 3%. The broker suggests that they add a real estate fund to their current portfolio. The real estate fund has an expected return of 9% a volatility of 35% and a correlation of 0.1 with Zam Mutual Fund. Calculate the required return and recommend whether Zam Mutual Fund should add the real estate fund to its portfolio.
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