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Suppose you are the money manager of a $4 million investment fund (i.e., a portfolio). The fund consists of 3 stocks with the following dollar
Suppose you are the money manager of a $4 million investment fund (i.e., a portfolio). The fund consists of 3 stocks with the following dollar investments and betas:
Stock Investment Beta
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A $500,000 1.2
B 1,000,000 0.8
C 2,500,000 0.6
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What is the funds required rate of return? Assume that the risk-free rate is 6 % and the market risk premium is 8%.
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