Portfolio Beta = [320,000(1.50) + 600,000(-0.50) + 1,120,000(1.25) + 1,900,000(0.75)]/(3,940,000)
Portfolio Beta = 0.76
Using CAPM Model,
Required Return = 0.06 + 0.76(0.08 - 0.06)
Required Return = 7.52%
O eBook Problem Walk-Through Suppose you are the money manager of a $3.94 million investment fund. The fund consist...
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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: Problem Walk-Through еВook 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: Stock Investment Beta 560,000 A 1.50 400,000 (0.50) В 1,560,000 C 1.25 2,100,000 0.75 If the market's required rate of return is 8% and the risk-free rate is 3%,...
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