Suppose you are a money manager of a $5 million investment fund. The fund is invested...

 

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Suppose you are a money manager of a $5 million investment fund. The fund is invested in four funds with the following investments and betas: Stock A B Shares 100,000 100,000 75,000 20,000 C D Price Per Share $10 Beta 1.50 0.85 $20 $20 $25 a. If the market expected rate of return is 9.0% and the risk free rate (T-bill return) is 4%, what is the fund's beta and expected rate of return? (hint! Calculate the weights first) b. Stock D is considered too risky. You decide to sell it at its posted value and invest the proceeds T-bills (what is the T-bill beta?). Find the new fund's beta and expected rate of return. 1.00 1.60 Suppose you are a money manager of a $5 million investment fund. The fund is invested in four funds with the following investments and betas: Stock A B Shares 100,000 100,000 75,000 20,000 C D Price Per Share $10 Beta 1.50 0.85 $20 $20 $25 a. If the market expected rate of return is 9.0% and the risk free rate (T-bill return) is 4%, what is the fund's beta and expected rate of return? (hint! Calculate the weights first) b. Stock D is considered too risky. You decide to sell it at its posted value and invest the proceeds T-bills (what is the T-bill beta?). Find the new fund's beta and expected rate of return. 1.00 1.60

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A What is the funds beta and expected rate of return Beta 110 Expected rate of return 950 Working i ... View the full answer