Equations must be shown if applicable 1 Is it possible to construct a portfolio of real world stocks that has a required return equal to the risk free rate Explain 2 PORTFOLIO BETAAn individual has $20,000 invested in a stock with a beta of 0 6 and another $75,000 invested in a stock with a beta of 2 5 If these are the only two investments in her portfolio, what is her portfolio's beta 3 PORTFOLIO REQUIRED RETURN 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 Stock Investment Beta A $460,000 1 50 B $500,000 (0 50) C $1,260,000 1 25 D $2,600,000 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 4 PORTFOLIO BETAA mutual fund manager has a $20 million portfolio with a beta of 1 7 The risk free rate is 4 5 , and the market risk premium is 7 The manager expects to receive an additional $5 million, which she plans to invest in a number of stocks After investing the additional funds, she wants the fund's required return to be 15 What should be the average beta of the new stocks added to the portfolio

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Question: Equations must be shown if applicable 1. Is it possible to construct a portfolio of real-world stocks that has a required return equal to the

Equations must be shown if applicable

1. Is it possible to construct a portfolio of real-world stocks that has a required return equal to the risk-free rate? Explain.

2. PORTFOLIO BETAAn individual has $20,000 invested in a stock with a beta of 0.6 and another $75,000 invested in a stock with a beta of 2.5. If these are the only two investments in her portfolio, what is her portfolio's beta?

3. PORTFOLIO REQUIRED RETURN 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:

Stock	Investment	Beta
A	$460,000	1.50
B	$500,000	(0.50)
C	$1,260,000	1.25
D	$2,600,000	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?

4. PORTFOLIO BETAA mutual fund manager has a $20 million portfolio with a beta of 1.7. The risk-free rate is 4.5%, and the market risk premium is 7%. The manager expects to receive an additional $5 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 15%. What should be the average beta of the new stocks added to the portfolio?

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