a.Portfolio beta=Respective beta*Respective weight
=(420,000/4,640,000*1.5)+(500,000/4,640,000*-0.5)+(1,020,000/4,640,000*1.25)+(2,700,000/4,640,000*0.75)
=0.793103448
required return=risk-free rate +Beta*(market rate- risk-free rate)
=5+0.793103448*(9-5)
=8.17%(Approx).
b.required return=risk-free rate +Beta*(market rate- risk-free rate)
9.5=2.5+Beta*(13.5-2.5)
Beta=(9.5-2.5)/(13.5-2.5)
=0.64(Approx).
8.7/8.8 Suppose you are the money manager of a $4.64 million investment fund. The fund consists of four stocks with the...
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