5.Beta and required rate of return A stock has a required return of 11%; the ris

Question

5.Beta and required rate of return
A stock has a required return of 11%; the risk-free rate is 4%; and the market risk premium is 6%.
What is the stock's beta? Round your answer to two decimal places.

6.Portfolio required return
Suppose you are the money manager of a $4.89 million investment fund. The fund consists of 4 stocks with the following investments and betas:
Stock Investment Beta
A $ 440,000 1.50
B 520,000 - 0.50
C 1,180,000 1.25
D 2,750,000 0.75
If the market's required rate of return is 12% and the risk-free rate is 7%, what is the fund's required rate of return? Round your answer to two decimal places.
%

Explanation / Answer

5. Return on equity = Risk free rate + beta x Market risk premium 11% = 7% + beta x 4% Beta = 1

Related Questions

Navigate

• Browse (All)
• Browse 5
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.