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

You plan to invest the Kish Hedge Fund , which has total capital of $ 500 million invested in five stocks : Stock Investment Stock's Beta Coefficient A $ 160 million 0.3120 million 1.6801.8 D 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 future market returns is realistic : 1=3% and you believe the following probability distribution for Probability Market Return 0.126%0.20.4120.2280.154 a . What is the equation for the Security Market Line ( SML )?( Hint : First determine the expected market return .). IV . V.1.1%(10.8%) b .n=3.0\%+(9.4\%)b 1; n =3.3%+(10.2%)* b; r_{1}=3.3%+(9.4%)* b_{1}; r_{l}=3%+(10.2%)* b_{l}-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 , 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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