Question
Suppose you are the money manager of a $3.51 million investment fund. The fund consists of four stocks with the following investments and betas: Stock
Suppose you are the money manager of a $3.51 million investment fund. The fund consists of four stocks with the following investments and betas:
| Stock | Investment | Beta |
| A | $ 360,000 | 1.50 |
| B | 360,000 | (0.50) |
| C | 940,000 | 1.25 |
| D | 1,850,000 | 0.75 |
If the market's required rate of return is 10% 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.
%
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Financial Mathematics Derivatives And Structured Products
Authors: Chan
1st Edition
9811336954, 978-9811336959
