Question
Suppose you are the money manager of a $4.12 million investment fund. The fund consists of four stocks with the following investments and betas: Stock
Suppose you are the money manager of a $4.12 million investment fund. The fund consists of four stocks with the following investments and betas:
| Stock | Investment | Beta | ||
| A | $ 360,000 | 1.50 | ||
| B | 600,000 | (0.50 | ) | |
| C | 1,460,000 | 1.25 | ||
| D | 1,700,000 | 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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Financial Management Principles And Practice
Authors: Timothy Gallagher
6th Edition
1930789157, 978-1930789159
