Question
In: Finance
Suppose you are the money manager of a $4.38 million investment fund. The fund consists of...
Suppose you are the money manager of a $4.38 million investment fund. The fund consists of four stocks with the following investments and betas:
| Stock | Investment | Beta | ||
| A | $ 440,000 | 1.50 | ||
| B | 400,000 | (0.50 | ) | |
| C | 1,440,000 | 1.25 | ||
| D | 2,100,000 | 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.
%
Solutions
Expert Solution
Ans 11.25%
| Stock | INVESTMENT (i) | Beta (ii) | Investment* Beta (i)* (ii) |
| A | 4,40,000 | 1.50 | 6,60,000.00 |
| B | 4,00,000 | (0.50) | (2,00,000.00) |
| C | 14,40,000 | 1.25 | 18,00,000.00 |
| D | 21,00,000 | 0.75 | 15,75,000.00 |
| Total | 43,80,000 | 38,35,000 | |
| AVERAGE BETA = | (INVESTMENT * BETA) / TOTAL INVESMENT | ||
| 3835000 / 4380000 | |||
| 0.875570776256 | |||
| Required Return = | Risk free Return + (Market Return - Risk free return)* Beta | ||
| Required Return = | 6% + (12% - 6%)*0.875570776256 | ||
| Required Return = | 11.25% |
jeff jeffy answered 2 years agoRelated Solutions
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.
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
$ 460,000
1.50
B
680,000
(0.50)
C
1,380,000
1.25
D
1,850,000
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.
Suppose you are the money manager of a $4.18 million investment fund. The fund consists of...
Suppose you are the money manager of a $4.18 million investment
fund. The fund consists of four stocks with the following
investments and betas:
Stock
Investment
Beta
A
$ 420,000
1.50
B
400,000
(0.50)
C
1,460,000
1.25
D
1,900,000
0.75
If the market's required rate of return is 9% and the risk-free
rate is 7%, 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 $4.66 million investment fund. The fund consists of...
Suppose you are the money manager of a $4.66 million investment
fund. The fund consists of four stocks with the following
investments and betas: Stock Investment Beta A $ 240,000 1.50 B
520,000 (0.50) C 900,000 1.25 D 3,000,000 0.75 If the market's
required rate of return is 12% 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 $4.62 million investment fund. The fund consists of...
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
A
$ 360,000
1.50
B
600,000
(0.50
)
C
960,000
1.25
D
2,700,000
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.
Suppose you are the money manager of a $4.48 million investment fund. The fund consists of...
Suppose you are the money manager of a $4.48 million investment
fund. The fund consists of four stocks with the following
investments and betas:
Stock
Investment
Beta
A
$ 340,000
1.50
B
800,000
(0.50
)
C
1,140,000
1.25
D
2,200,000
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.
2. An individual has $20,000...
Suppose you are the money manager of a $3.92 million investment fund. The fund consists of...
Suppose you are the money manager of a $3.92 million investment
fund. The fund consists of four stocks with the following
investments and betas:
Stock
Investment
Beta
A
$ 200,000
1.50
B
620,000
(0.50)
C
900,000
1.25
D
2,200,000
0.75
If the market's required rate of return is 9% 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.
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Why are FPGAs used over other programmable Devices such as the GAL chip?
- Examine the fiscal policies in place at the start of your specific time period of 2000-2010...
- Consider the given matrix (the top 250 rated movies according to IMDB). Consider a sample consist...
- What is the current level of income inequality in the United States? What do you think...
- Bakes A Lot, Inc., has $1,000 face value bonds outstanding. These bonds pay interest semi-annually, mature...
- Pick a Distributive System of any kind and ask yourself what is (are) being distributed? Write...
- Johnson Real Estate Company was founded 25 years ago by the current CEO, David Johnson. The...
ADVERTISEMENT