Question: Please answer both 1) Suppose you are the money manager of a $4.72 million investment fund. The fund consists of four stocks with the following
Please answer both
1) Suppose you are the money manager of a $4.72 million investment fund. The fund consists of four stocks with the following investments and betas:
| Stock | Investment | Beta | ||
| A | $ 460,000 | 1.50 | ||
| B | 300,000 | (0.50 | ) | |
| C | 1,160,000 | 1.25 | ||
| D | 2,800,000 | 0.75 | ||
If the market's required rate of return is 10% 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.
%
2)
A stock's returns have the following distribution:
| Demand for the Company's Products | Probability of this Demand Occurring | Rate of Return if this Demand Occurs |
| Weak | 0.1 | (38%) |
| Below average | 0.1 | (13) |
| Average | 0.3 | 12 |
| Above average | 0.3 | 36 |
| Strong | 0.2 | 54 |
| 1.0 |
Assume the risk-free rate is 4%. Calculate the stock's expected return, standard deviation, coefficient of variation, and Sharpe ratio. Do not round intermediate calculations. Round your answers to two decimal places.
Stock's expected return: %
Standard deviation: %
Coefficient of variation:
Sharpe ratio:
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