The Kish Investment Fund, in which you plan to invest some money, has total capital of $500 million invested in five stocks:

The beta coefficient for a fund like Kish Investment can be found as a weighted average of the fund's investments. The current risk-free rate is 6 percent, whereas market returns have the following estimated probability distribution for the next period:
PROBABILITY MARKET RETURN
0.1 .......................................7%
0.2 .......................................9
0.4 .......................................11
0.2 .......................................13
0.1 .......................................15
a. What is the estimated equation for the Security Market Line (SML)?
b. Calculate the fund's required rate of return for the next period.

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STOCK $160 million 120 million 80 million 80 million 60 million STOCK'S BETA COEFFICIENT 0.5 2.0 4.0 1.0 3.0