Suppose you are the money manager of a $4 07 million investment fund The fund consists of four stocks with the following investments and betas Stock Investment Beta A $240,000 1 50 B 560,000 (0 50) C 1,420,000 1 25 D 1,850,000 0 75 If the market 's required rate of return is 12 and the risk free ra...

To calculate the funds required rate of return we need to find the weighted average of the required ...

Suppose you are the money manager of a $4.07 million investment fund. The fund consists of four

Fantastic news! We've Found the answer you've been seeking!

Question:

Suppose you are the money manager of a $4.07 million investment fund. The fund consists of four stocks with the following investments and betas:

Stock	Investment	Beta
A	$ 240,000	1.50
B	560,000	(0.50)
C	1,420,000	1.25
D	1,850,000	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.

Related Book For answer-question

Fundamentals of Financial Management

ISBN: 978-1305635937

Concise 9th Edition

Authors: Eugene F. Brigham

See More Books

Posted Date: Mar 05, 2024 04:48 AM

See More Questions

Suppose you are the money manager of a $4.82 million investment fund. The fund consists of four stocks with the following investments and betas: If the markets required rate of return is 8% and the...
Design a proportional control system for the following plant that yields a steady- state error for a unit step input of less than 0.05, a %OS less than 10%, and a 2% settling time of less than 0.5...
Consider a tank containing a liquid, and the rate of change of the liquid's height (h) with respect to time (t) is proportional to the difference between the current height and a reference height....
Terry Holden's stepmother, Rosie, was diagnosed with amyotrophic lateral sclerosis (ALS), and Terry's wife, Susan, became Rosie's primary caregiver. Rosie executed a durable power of attorney...
Identify which of the following sets are open, which are closed, and which are neither. Find E, , and E and sketch E in each case. a) E = {(x, y): x2 + 4y2 < 1} b) E = {(x, y): x2 - 2x + y2 = 0}U...
In 2014, Air Asia Flight No. 8501 crashed in the Java Sea while flying from Indonesia to Singapore. The crash resulted in the deaths of all passengers and crew on board. The plane involved in the...
Wiengot Antennas, Inc., produces and sells a unique type of TV antenna. The company has just opened a new plant to manufacture the antenna, and the following cost and revenue data have been provided...
Q5). Given the graph y= f(x), graph y=[-2(x-1)]-2 on the same grid on your right. Use at least 4 points: Show steps
How will different managers in the hospital management hierarchy use the information for their own different purposes ?
Using the Black-Scholes formula, obtain the call and put price of an option with the following information: a. Stock Price $58 b. Exercise price $60 c. Time to expiration 124 days d. Volatility 12%...
Extend the example from the code below to use the dropdown to have the user select their favorite. When the season is selected change the background color, add an image and have it change and text...
Three objects are located along the x-axis. Object A with a charge of +5.6 C is located at the origin. Object B has a charge of -4.2 C and is located at the -1.2 m location. Object C has a charge of...
when considering recruiting by posting to social media, in the U.S. we need to be sensitive to possible discriminatory claims, would that also be true when recruiting in Europe?
1. 250 college students were surveyed about whether they liked the food options offered by the cafeteria.140 people said they liked the options offered.What percentage of students like the food...
Marcus, a resident of Texas, has found the ideal gift for his wife in celebration of their upcoming wedding anniversary a $22,000 diamond tennis bracelet. However, Marcus is appalled at the prospect...
Using the information presented in Problem 13.4B, prepare a partial statement of cash flows for the current year, showing the computation of net cash flows from operating activities using the...
The real risk-free rate is 2.05%. Inflation is expected to be 3.05% this year, 4.75% next year, and 2.3% thereafter. The maturity risk premium is estimated to be 0.05 (t -1)%, where t = number of...
You want to buy a house within 3 years, and you are currently saving for the down payment. You plan to save $9,000 at the end of the first year, and you anticipate that your annual savings will...
You want to buy a house that costs $140,000. You have $14,000 for a down payment, but your credit is such that mortgage companies will not lend you the required $126,000. However, the realtor...
The line depicting the risk and return of portfolio combinations of a risk-free asset and any risky asset is the: A. Security market line. B. Capital allocation line. C. Security characteristic line.
With respect to the capital market line, a portfolio on the CML with returns less than the returns on the market portfolio represents a(n): A. Lending portfolio. B. Borrowing portfolio. C....
The portfolio of a risk-free asset and a risky asset has a better riskreturn tradeoff than investing in only one asset type because the correlation between the risk-free asset and the risky asset is...

Suppose you are the money manager of a $4.07 million investment fund. The fund consists of four

Question:

Expert Answer:

To calculate the funds required rate of return we need to find the weighted average of the required ... View the full answer

Fundamentals of Financial Management

Students also viewed these finance questions