Question
Suppose you are the money manager of a $4.52 million investment fund. The fund consists of four stocks with the following investments and betas: Stock
Suppose you are the money manager of a $4.52 million investment fund. The fund consists of four stocks with the following investments and betas:
| Stock | Investment | Beta | ||
| A | $ 460,000 | 1.50 | ||
| B | 800,000 | (0.50 | ) | |
| C | 1,160,000 | 1.25 | ||
| D | 2,100,000 | 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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Finance A Quantitative Introduction Volume 2
Authors: Piotr Staszkiewicz, Lucia Staszkiewicz
1st Edition
0128027975, 978-0128027974
