Question
Suppose you are the money manager of a $4.38 million investment fund. The fund consists of four stocks with the following investments and betas: Stock
Suppose you are the money manager of a $4.38 million investment fund. The fund consists of four stocks with the following investments and betas:
| Stock | Investment | Beta | ||
| A | $ 540,000 | 1.50 | ||
| B | 600,000 | (0.50 | ) | |
| C | 1,240,000 | 1.25 | ||
| D | 2,000,000 | 0.75 | ||
If the market's required rate of return is 12% 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.
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Equity Valuation And Portfolio Management
Authors: Frank J. Fabozzi, Harry M. Markowitz
1st Edition
047092991X, 9780470929919
