Question
Quantitative Problem: You are given the following probability distribution for CHC Enterprises: State of Economy Probability Rate of return Strong 0.25 20% Normal 0.55 9%
Quantitative Problem: You are given the following probability distribution for CHC Enterprises:
State of Economy | Probability | Rate of return |
Strong | 0.25 | 20% |
Normal | 0.55 | 9% |
Weak | 0.2 | -4% |
What is the stock's expected return? Round your answer to 2 decimal places. Do not round intermediate calculations. %
What is the stock's standard deviation? Round your answer to two decimal places. Do not round intermediate calculations. %
What is the stock's coefficient of variation? Round your answer to two decimal places. Do not round intermediate calculations.
Suppose you are the money manager of a $4.83 million investment fund. The fund consists of four stocks with the following investments and betas:
Stock | Investment | Beta |
A | $ 320,000 | 1.50 |
B | 560,000 | (0.50) |
C | 1,500,000 | 1.25 |
D | 2,450,000 | 0.75 |
If the market's required rate of return is 8% and the risk-free rate is 3%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.
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