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You plan to invest in the Kish Hedge Fund , which has total capital of $ 5 0 0 million invested in five stocks :

You plan to invest in the Kish Hedge Fund , which has total capital of $ 500 million invested in five stocks : Stock Investment Stock's Beta Coefficient A $ 1600.3 B 120 million 1.6 C 80 million 1.8 D 80 million 1.0 E 60 million 1.6 Kish's beta coefficient can be found as a weighted average of its stocks betas . The risk - free rate is 3%, and you believe the following probability distribution for future market returns is realistic : Probability Market Return 0.1-26%0.200.4120.2280.154 a . What is the equation for the Security Market Line ( SML )?( Hint : First determine the expected market return .)3.0%(9.4%)3.3%(10.2%) b 3.3%(9.4%) bi IV .3.0%(10.2%) V.1.1%(10.8%) b -Select- b . Calculate Kish's required rate of return . Do not round intermediate calculations . Round your answer to two decimal places .%. Suppose Rick Kish , the president , receives a proposal from a company seeking new capital . The amount needed to take a position in the stock is $ 50 million , it has an expected return of 14%, and its estimated beta is 1.5. Should Kish invest in the new company ? The new stock -Select- be purchased . At what expected rate of return should Kish be indifferent to purchasing the stock ? Round your answer to two decimal places

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