Suppose you are the money manager of a $4.62 million investment fund. The fund consists of four stocks with the following investments and betas:
Portfolio beta=Respective beta*Respective investment weight
=(560,000/4,620,000*1.5)+(400,000/4,620,000*-0.5)+(1,560,000/4,620,000*1.25)+(2,100,000/4,620,000*0.75)
=0.901515152
Required return=risk free rate+beta*(market rate-risk free rate)
=3+0.901515152*(8-3)
=7.51%(Approx)
Suppose you are the money manager of a $4.62 million investment fund. The fund consists of...
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