Question: Kish's beta coefficient can be found as a weighted average of its stocks' betas. The risk-free rate is 5%, and you believe the following probability
Kish's beta coefficient can be found as a weighted average of its stocks' betas. The risk-free rate is 5%, and you believe the following probability distribution for future markot retums is realistic: a. What is the equation for the Security Market Line (5ML)? (Hint: First determine the expected market return.) 1.nII.nIII.nTV.nV.n=5.0%+(8.4%)b1=8.7%+(7.7%)bc=8.7%+(8.4%)bj=5.0%+(7.7%)bi=2.2%+(6.6%)bi b. Calculate Kish's required rate of return. Do not round intermediate calculations. Round your answer to two decimal places. C. Suppose Ruck Kish, the president, recelves a proposal from a company seeking new capital. The amount needed to take a position in the stock is 550 million, it has an expected return of 14%, and its estimated beta is 1.5. Sheuld Kosh invest in the new company? The new stock be purchosed. At what expected rate of return should kish be indifferent to purchasing the stock? Round your answer to two decimal ploces
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