Portfol.o Return

Portfolio Requised Return

$(1)$ Suppose you are the manager of a $3\mathrm{.}48$ millon inuestment fund. The fund consist of fou. stocks with the follow stocks and beta.

$D$

$940,000$

$(1)\frac{1,700,000}{3,480,000}$

$1\mathrm{.}25,r_i=r_f+b_i(MRP3\%)$

$0\mathrm{.}75,m_{RP}=r_{m-r_F}8\%-5\%=3\%$

If the maeket required rate of return is $8\%$ and risk free is $5\%.$ what is the funds required rate of return. Round $2$ decimal places.

What is the weight in each in

A $440,\frac{000}{3},480,000$ each inuestment?

B $400,00013,480,000(0\mathrm{.}50)=-0\mathrm{.}0575$

What is the return?

$r_i=r_{RF}+b(r_m^m-r_{RF})$

C $940,\frac{000}{3},480,0001\mathrm{.}25=0\mathrm{.}3376$

P I, $700,00013,480,0000\mathrm{.}75=\frac{0\mathrm{.}3644}{0\mathrm{.}9512}$

Find the required Return of each stock?

$r_1=r_{RF}+b(r_m-r_{RF})$

$r_A=5\%+(10\mathrm{.}005\%)=5\%+0\mathrm{.}045=$

$r_B=5\%+(-0\mathrm{.}00150\%)=5016+0\mathrm{.}015$

$r_c=5\%+(1,253\%)=5\%+0\mathrm{.}057$

$r_D=50\%+(0\mathrm{.}75325)=5\%+2028$

What would be the return off the portfolio. $($weisht $x$ requind return$)$

Werght $ofA=0\mathrm{.}18979\mathrm{.}5=1\mathrm{.}802\%$

$B=0\mathrm{.}05753\mathrm{.}5=0\mathrm{.}201\%$

$C=0\mathrm{.}33768\mathrm{.}8=2\mathrm{.}971\%$

$D=0\mathrm{.}36647\mathrm{.}3=2\mathrm{.}675\%$

I need to know where I$\text{'}$m going wrong and why $7\mathrm{.}85$ is incorrect