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You manage the following $5 million portfolio that contains stocks A through D. The required rate of return on the market is 7.00% and the
You manage the following $5 million portfolio that contains stocks A through D. The required rate of return on the market is 7.00% and the risk-free rate is 2.25%. What is the portfolio's required rate of return? Do not round your intermediate calculations.
Stock | Amount | Beta | ||
A | 725,000 | 1.95 | ||
B | 275,000 | 0.50 | ||
C | 3,500,000 | 1.45 | ||
D | 500,000 | 0.75 | ||
$5,000,000 |
a. | 10.75% | |
b. | 7.95% | |
c. | 9.83% | |
d. | 8.90% | |
e. | 8.02% |
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