Beta and CAPM

Answer questions 9 to 11 based on the following information:

A mutual fund is holding the following portfolio:

Stock Amount Invested Beta

1 $300,000 0.6

2 300,000 1.0

3 450,000 1.4

4 450,000 1.8

The risk-free rate is 6 percent and the rate of return on the market portfolio is 10 percent.

9. What would be the portfolios beta? (2 points)

10. What would be the portfolios required rate of return? (3 points)

11. If the expected rate of return on the portfolio is 13.68 percent, should the mutual fund be purchased? Why? (2 points)

(Please do not answer this using Excel. Preferably using TI-84 or equivalent)