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 $160 million 120 million 80 million 80 million 60 million 1.9 Kish's beta coefficient can be found as a weighted average of its stocks' betas. The risk-free rate is 6%, and you believe the following probability distribution for future market returns is realistic: 0.1 28 Probability Market Return -28 % 0.2 0.4 12 0.2 0.1 a. What is the equation for the Security Market Line (SML)? (Hint: First determine the expected market return.) I. r; = 6.0% + (7.3%) II. r; = 5.4% + (6.3%)b; III. r; = 5.4% + (7.3%)b; IV. r; = 6.0% + (6.3%)b; V. ri = 6.7% + (6.2%)b; 47 -Select- b. Calculate Kish's required rate of return. Do not round intermediate calculations. Round your answer to two decimal places. C. 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 17%, and its estimated beta is 1.4. 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