Question

Consider the following information and then calculate the required rate of return for the Scientific Investment Fund, which holds 4 stocks. The market's required rate of return is 13%, the risk-free rate is 6%, and the Fund's assets are as follows:

Stock	Investment	Beta
A	$   200,000	1.50
B	300,000	-0.50
C	500,000	1.25
D	1,000,000	1.0

Round it to two decimal places without the percent sign (%), e.g., 13.56.

Answer 1

Portfolio Beta

=(200000/2000000)*1.50+(300000/2000000)*(-0.50)+(500000/2000000)*1.25+(1000000/2000000)*1.00

=0.8875

calculate the required rate of return for the Scientific Investment Fund

=Rf+beta*(market rate-Rf)

=6%+0.8875*(13%-6%)

=12.21%

the above is answer..