Question
In addition to risk-free securities, you are currently invested in the Tanglewood Fund, a broad-based fund of stocks and other securities with an expected return
In addition to risk-free securities, you are currently invested in the Tanglewood Fund, a broad-based fund of stocks and other securities with an expected return of 10.08 and a volatility of 29.73%. Currently, the risk-free rate of interest is 3.57%. Your broker suggests that you add a venture capital fund to your current portfolio. The venture capital fund has an expected return of19.41%, a volatility of 72.44%, and a correlation of 0.18 with the Tanglewood Fund. Calculate the required return and use it to decide whether you should add the venture capital fund to your portfolio.
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