You are the money manager of a 5 stock portfolio with the following investment amounts in...

You are the money manager of a 5 stock portfolio with the following investment amounts in each one: $10 million, $2 million, $5 million, $6 million and $500,000. The betas of the 5 stocks are 1.25, -1.75, 1.00, 0.75 and 1.9, respectively. The market's required return is 14% and the risk free return is 4.8%. What is the required return on this portfolio?

Expert Solution

jeff jeffy answered 4 months ago

A money manager is holding the following portfolio: Stock Amount Invested Beta &nbs

A money manager is holding the following portfolio: Stock Amount Invested Beta 1 $400,000 1.00 2 600,000 0.85 3 300,000 1.20 4 500,000 0.50 5 200,000 1.70 The risk-free rate is 7 percent and the portfolio’s required rate of return is 13.975 percent. The manager would like to sell all of her holdings of Stock 4 and use half the proceeds to purchase more shares of Stock 5, and the other half of...

PORTFOLIO REQUIRED RETURN Suppose you are the money manager of a $5.15 million investment fund. The...

PORTFOLIO REQUIRED RETURN Suppose you are the money manager of a $5.15 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta A $ 500,000 1.50 B 400,000 (0.50) C 1,500,000 1.25 D 2,750,000 0.75 If the market's required rate of return is 11% and the risk-free rate is 6%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places. %

PORTFOLIO REQUIRED RETURN Suppose you are the money manager of a $4.78 million investment fund. The...

PORTFOLIO REQUIRED RETURN Suppose you are the money manager of a $4.78 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta A $ 500,000 1.50 B 420,000 (0.50) C 1,460,000 1.25 D 2,400,000 0.75 If the market's required rate of return is 10% and the risk-free rate is 6%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.

PORTFOLIO REQUIRED RETURN Suppose you are the money manager of a $4.72 million investment fund. The...

PORTFOLIO REQUIRED RETURN Suppose you are the money manager of a $4.72 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta A $ 460,000 1.50 B 440,000 (0.50) C 1,220,000 1.25 D 2,600,000 0.75 If the market's required rate of return is 13% and the risk-free rate is 4%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.

6. PORTFOLIO REQUIRED RETURN Suppose you are the money manager of a $4.9 million investment fund....

6. PORTFOLIO REQUIRED RETURN Suppose you are the money manager of a $4.9 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta A $ 240,000 1.50 B 400,000 (0.50) C 1,260,000 1.25 D 3,000,000 0.75 If the market's required rate of return is 9% and the risk-free rate is 6%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.

Problem 8-7 Portfolio required return Suppose you are the money manager of a $4.09 million investment...

Problem 8-7 Portfolio required return Suppose you are the money manager of a $4.09 million investment fund. The fund consists of 4 stocks with the following investments and betas: Stock Investment Beta A $ 380,000 1.50 B 500,000 - 0.50 C 1,060,000 1.25 D 2,150,000 0.75 If the market's required rate of return is 10% and the risk-free rate is 7%, what is the fund's required rate of return? Round your answer to two decimal places.

Mickey is the manager of a portfolio of equities as shown below. Stock Investment Beta A...

Mickey is the manager of a portfolio of equities as shown below. Stock Investment Beta A $300,000 2.0 B $300,000 1.2 C $400,000 0.6 The risk free rate is 3% and the market risk premium is 7%. Mickey’s best friend, Donald, calls him and asks him to help evaluate the bonds of Goofy Limited as there may be a window of opportunity for arbitrage. The bonds have face value of $1,000 and pay 5% annual coupons. The bonds mature in...

Imagine you are the manager of a pension fund that invests large amounts of money in...

Imagine you are the manager of a pension fund that invests large amounts of money in companies, most of which are listed on the London Stock Exchange. Returns on your investments provide the funds to pay the pension beneficiaries. State the proportions of fixed interest securities (i.e. debentures, preference shares, etc.) and ordinary shares you would choose with a view to minimising the risk to funds and maximising returns. State briefly the reasons for your investment strategy. (ii) State a...

You are the investment manager of a Stock Fund. You have the following three stocks in...

You are the investment manager of a Stock Fund. You have the following three stocks in portfolio (Eli SuperMarkets (ESM), Kean Luxury Clothing (KLC) and Eds Financial Services (ESF)) and now you need to re-evaluate your positions and make decisions to either buy, hold, sell or maybe even short these stocks. Please answer the following questions. Use the information mentioned at the bottom of this page. What is the fair value of stock ESM? Explain/Show Calculations. Stock 1 – Eli...

You are holding a portfolio with the following investments and betas: Stock Dollar investment Beta A...

You are holding a portfolio with the following investments and betas: Stock Dollar investment Beta A $200,000 1.35 B 200,000 1.60 C 400,000 0.85 D 200,000 -0.20 Total investment $1,000,000 The market's required return is 11% and the risk-free rate is 4%. What is the portfolio's required return? Do not round intermediate calculations. Round your answer to three decimal places.

Question