Question: Please help and explain how to do this problems Suppose you are the money manager of a $4.79 million investment fund. The fund consists of
Please help and explain how to do this problems



Suppose you are the money manager of a $4.79 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta A $300,000 1.50 (0.50) 600,000 P 1.25 C 1,340,000 D 2,550,000 0.75 If the market's required rate of return is 9% and the risk-free rate is 6%, what the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places. Stocks A and B have the following probability distributions of expected future returns: Probability A B (14%) (40%) 0.2 0.2 0.3 22 10 0.2 19 25 0.1 30 38 8.20%.) Do not round intermediate calculations. Round your answer to two decimal places. a. Calculate the expected rate of return, rB, for Stock B (rA % b. Calculate the standard deviation of expected returns, oA, for Stock A (aB 26.07%.) Do not round intermediate calculations. Round your answer to two decimal places. % c. Now calculate the coefficient of variation for Stock B. Round your answer to two decimal places. d. Is it possible that most investors might regard Stock B as being less risky than Stock A? I If Stock B is more highly correlated with the market than A, then it might have a lower beta than Stock A, and hence be less risky in a portfolio sense. II If Stock B is more highly correlated with the market than A, then it might have the same beta as Stock nd bence be just as risky in a portfolio sense. III. If Stock B is less highly correlated with the market than A, then it might have a lower beta than Stock A, and hence be less risky in a portfolio sense. IV. If Stock B is less highly correlated with the market than A, then it might have a higher beta than Stock A, and hence be more risky in a portfolio sense. higher beta than Stock A, and hence be less risky in a portfolio sense. V. If Stock B is more highly correlated with the market than A, then it might have Quantitative Problem: You are holding a portfolio with the following investments and betas: Stock Dollar investment Beta $250,000 1.15 A 150,000 1.6 500,000 0.8 -0.15 100,000 Total investment $1,000,000 The market's required return is 11% and the risk-free rate is 3%. What is the portfolio's required return? Round your answer to 3 decimal places. Do not round intermediate calculations. %
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