Suppose you manage a $4.5 million fund that consists of four stocks with the fol

Question

Suppose you manage a $4.5 million fund that consists of four stocks with the following investments:
Stock Investment Beta
A $480,000 1.50
B 650,000 -0.50
C 1,020,000 1.25
D 2,350,000 0.75
If the market's required rate of return is 8% and the risk-free rate is 4%, what is the fund's required rate of return? Round your answer to two decimal places.
%


Suppose rRF = 6%, rM = 8%, and rA = 16%.
Calculate Stock A's beta. Round your answer to two decimal places.


If Stock A's beta were 1.0, then what would be A's new required rate of return? Round your answer to two decimal places.
%


Assume that the risk-free rate is 2.5% and that the market risk premium is 3%.
What is the required rate of return on a stock with a beta of 0.8? Round your answer to two decimal places.
%
What is the required rate of return on a stock with a beta of 2.1? Round your answer to two decimal places.
%




An individual has $50,000 invested in a stock with a beta of 0.7 and another $55,000 invested in a stock with a beta of 1.7. If these are the only two investments in her portfolio, what is her portfolio's beta? Round your answer to two decimal places.

Explanation / Answer

C 1,020,000 1.25

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