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You plan to invest in the Kish Hedge Fund, which has total capital of exist500 million invested in five stocks: Kish's beta coefficient can be
You plan to invest in the Kish Hedge Fund, which has total capital of exist500 million invested in five stocks: 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: What is the equation for the Security Merkel Line (SML)? (Mint: First determine the expected market return.) 4.4% + (9.1%) 3.0% + (7.796) n = 5.3% + (9.4% n = 3.0% + (9.1%)b: n = 4.4% + (7.7%) Calculate Kish's required rate of return. Do not round intermediate calculations, Suppose Rick Kish, the president receives a proposal from a company seeking new capital, The amount needed to take a post on the stock exist50 million it has an expected et o 14% and its estimated beta s 1 5. Should Kish vest the new company? The new stock be purchased At what expected rate of return should Kish be indifferent to purchasing the stock
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