Ch 08: End-of-Chapter Problems-LPK - Risk and Rates of Return You plan to invest in the Ksh Hedge Fund, which has total capital of $500 million invested in five stocks: Stock Investment Stock's Beta Coefficient $160 milion 0.6 B 120 million 1.6 80 million 2.0 D B0 milion 1.0 60 milion Kish's beta coefficient can be found as a weighted average of its stockebetas. The risk free rate is 3%, and you believe the following probability distribution for future market returns is realistic Probability Market Return 0.1 -27% 0.2 0.4 0.2 30 0.1 52 What is the equation for the security Market Line (SL) CHI Pirst determine the expected market return) 1.3.0+ 19.7%) 11.-4.6% (107) 111. - 4.6+(9.74 TV.3.0 + (107) V. - 4.0%+(10:04 b. Calculata required to return. Do not und immediate calculations. Round your answer to two decimal places c. Suppose Rick is the president, receives a prop from a company canalThe amount needed to take a position in the stock 50 milion has an expected return of ion, and its estimated beta 1.4. Should Kish invest in the new company The new shocked be purchased At what expected rate of return should kishte indifferent to purchasing the stock? Round your answer to two decimal places