Suppose you manage a $4.405 million fund that consists of four stocks with the following investments:...
Suppose you manage a $4.405 million fund that consists of four stocks with the following investments:
| Stock | Investment | Beta | |
| A | $320,000 | 1.50 | |
| B | 325,000 | -0.50 | |
| C | 1,060,000 | 1.25 | |
| D | 2,700,000 | 0.75 | |
If the market's required rate of return is 9% and the risk-free rate is 7%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.
%
Homework Answers
![weights Product Amount invested $ 320,000.00 $ 325,000.00 $1,060,000.00 $ 2,700,000.00 $ 4,405,000.00 Stock (Price/total) 0.073 0.074 0.241 0.613 Beta 1.5 -0.50 1.25 0.75 [weight x beta ] 0.11 -0.04 0.30 0.46 0.83 Total Beta of the porttolio 8.67% 0.07+0.83*0.02) Required return](http://img.homeworklib.com/questions/f54d9fa0-71d9-11ea-8f27-e9d88648f2f4.png?x-oss-process=image/resize,w_560)
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Suppose you manage a $4.405 million fund that consists of four
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