Question
Suppose you are the money manager of a $4.32 million investment fund. The fund consists of four stocks with the following investments and betas: Stock
Suppose you are the money manager of a $4.32 million investment fund. The fund consists of four stocks with the following investments and betas:
| Stock | Investment | Beta | ||
| A | $ 260,000 | 1.50 | ||
| B | 600,000 | (0.50 | ) | |
| C | 1,560,000 | 1.25 | ||
| D | 1,900,000 | 0.75 | ||
If the market's required rate of return is 11% and the risk-free rate is 5%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Finance For Managers
Authors: Harvard Business School Press
1st Edition
1578518768, 978-1578518760
