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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
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 $160 million 0.6 B 120 million 1.2 C 80 million 2.2 D 80 million 1.0 E 60 million 1.8 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: Probability Market Return 0.1 -24 % 0.2 0 0.4 13 0.2 31 0.1 52 What is the equation for the Security Market Line (SML)? (Hint: First determine the expected market return.) ri = 6.7% + (7.9%)bi ri = 6.0% + (8.3%)bi ri = 4.3% + (8.2%)bi ri = 4.3% + (8.3%)bi ri = 6.0% + (8.2%)bi -Select- Calculate
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