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.

Expert Solution

Ans 9.49%

Stock	INVESTMENT (i)	Beta (ii)	Investment* Beta (i)* (ii)
A	5,00,000	1.50	7,50,000.00
B	4,20,000	(0.50)	(2,10,000.00)
C	14,60,000	1.25	18,25,000.00
C	24,00,000	0.75	18,00,000.00
Total	47,80,000		41,65,000.00


AVERAGE BETA =	(INVESTMENT * BETA) / TOTAL INVESMENT
	4165000 / 4780000
	0.871338912

Required Return =	Risk free Return + (Market Return - Risk free return)* Beta
Required Return =	6% + (10% - 6%)*0.871338912
Required Return =	9.49%

jeff jeffy answered 9 months ago

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 $4.72 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.

PORTFOLIO REQUIRED RETURN Suppose you are the money manager of a $4.95 million investment fund. The...

PORTFOLIO REQUIRED RETURN Suppose you are the money manager of a $4.95 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta A $ 480,000 1.50 B 660,000 (0.50) C 1,060,000 1.25 D 2,750,000 0.75 If the market's required rate of return is 12% 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. %

Suppose you are the money manager of a $4.78 million investment fund. The fund consists of...

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 $ 420,000 1.50 B 720,000 (0.50) C 940,000 1.25 D 2,700,000 0.75 If the market's required rate of return is 13% 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.

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.

Suppose you are the money manager of a $4.57 million investment fund. The fund consists of...

Suppose you are the money manager of a $4.57 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 980,000 1.25 D 2,950,000 0.75 If the market's required rate of return is 12% 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.

Suppose you are the money manager of a $4.37 million investment fund. The fund consists of...

Suppose you are the money manager of a $4.37 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta A $ 200,000 1.50 B 320,000 (0.50) C 1,300,000 1.25 D 2,550,000 0.75 If the market's required rate of return is 10% and the risk-free rate is 3%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.

Suppose you are the money manager of a $4.22 million investment fund. The fund consists of...

Suppose you are the money manager of a $4.22 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta A $ 260,000 1.50 B 300,000 (0.50 ) C 1,260,000 1.25 D 2,400,000 0.75 If the market's required rate of return is 8% 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. %

Suppose you are the money manager of a $4.86 million investment fund. The fund consists of...

Suppose you are the money manager of a $4.86 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta A $ 480,000 1.50 B 800,000 (0.50 ) C 980,000 1.25 D 2,600,000 0.75 If the market's required rate of return is 13% and the risk-free rate is 5%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.

Question