Question
Suppose you are the money manager of a $4.58 million investment fund. The fund consists of four stocks with the following investments and betas: Stock
Suppose you are the money manager of a $4.58 million investment fund. The fund consists of four stocks with the following investments and betas:
| Stock | Investment | Beta | ||
| A | $ 340,000 | 1.50 | ||
| B | 300,000 | (0.50 | ) | |
| C | 1,440,000 | 1.25 | ||
| D | 2,500,000 | 0.75 | ||
If the market's required rate of return is 9% 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
Fundamentals Of Futures And Options Markets
Authors: Jonn C. Hull
8th International Edition
0133382850, 9780133382853
