How to get the answers? Use the information for the question(s) below You are pr

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How to get the answers?

Use the information for the question(s) below You are presently nvested in the Luther Fund, a broad based mutual und that invests in stocks and other securities. The Luther Fund has an expected retum of 4% and a volatility of 20%, Risk-free Treasury bills are currently offering returns of 4%. You are considering adding a prec ous metals fund to your current portiolio. The metals fund has an expected retum o 10%, a volatility of 30%, and a correlation of- 20 with the Luther Fund. The beta of the precious metals fund with the Luther Fund r is closost to: Me tals OA. 0.3 O B. 0.6 c.-0.3 OD. -0.6

Explanation / Answer

Answer: Option [C] Calculation: Beta = Cor(Precious metal Luther metals)*SD Precious metal/SD Luther Fund = -0.20*0.30/0.20 = -0.30

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