Question

Attempts: Keep the Highest: /1 9. Problem 2-10 (Portfolio Required Return) eBook Problem Walk-Through Portfolio Required Return Suppose you manage a $4.12 million fund that consists of four stocks with the following investments: Stock Investment Beta A $320,000 1.50 650,000 -0.50 C 1,300,000 1.25 1,850,000 0.75 If the market's required rate of return is 9% and the risk-free rate is 5 % , what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places. %

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Answer 1

Rate of Return ke Re + Beta (Rm-Rt) Stock A ke + 5+ 1.5 (9-5) = 11% 840Ck8 ke • 5+ (-0.5)(9-5) 3x Stock C ke • 5+ 125(9-5) 10% Słocx D ke • 5+ 0 +5(9-5) 87. ed Reteun tuom each investment жск investment ke Return 320,000 35,200 650,00D 37. 19,500 1,300,000 10%, 130,000 1,850,000 87 148,000 332,700 Hands Jegeed late le-run: 832,700 4,120,000 - 8.074