Question

7. Given the following information, determine the beta coefficient for Stock G that is consistent with equilibrium: expected return for Stock G = 9.5%; risk-free rate of return = 3.5%; required return for the market = 9%. 8. Consider the following information for the Alachua Retirement Fund, with a total investment of $4 million. The market required rate of return is 12%, and the risk-free rate is 6%. What is its required rate of return? Stock Investment. Beta А $ 500,000 1.2 B 500,000 -0.4 с 1,000,000 1.5 D 2,000,000 0.8 Total $4,000,000

PLEASE SHOW EXPLANATION, WORK, AND EQUATIONS

Answer 1

Hi, As per the HOMEWORKLIB RULES, in case of multiple questions, I need to solve the first question.

The beta is computed as shown below:

Required rate of return = Risk free rate + Beta x (return on market - risk free rate)

0.09 = 0.035 + Beta x (0.09 - 0.035)

0.09 = 0.035 + Beta x 0.055

Beta = 1

I request you to please post remaining questions separately, since as per the guidelines in case of multiple questions, I need to solve the first question.

Feel free to ask in case of any query relating to this question