Please show computations in Excel formula.

Question 1

Part 1: If investors compare two different securities with similar risk, but have different expected returns, which security is the investor most likely to choose? Explain your answer.

Part 2: An individual has $35,000 invested in a stock with a beta of 0.65 and another $80,000 invested in a stock with a beta of 2.10. If these are the only two investments in her portfolio, what is her portfolios beta?

Part 3: A stock has a required return of 8.55%, the risk-free rate (rRF) is 3.15% and the market risk premium (RPM) is 2.5%.

a. What is the stocks beta?

b. If the market risk premium is increased to 4.0%, what would happen to the stocks required rate of return? Assume that the risk-free rate and the beta remain unchanged.

Part 4: Suppose you are the money manager of a $4.55 million investment fund. The fund consists of four stocks with the following investments and betas:

Stock	Investment	Beta
A	$420,000	1.50
B	$500,000	(0.50)
C	$1,230,000	1.25
D	$2,400,000	0.75

If the markets required rate of return is 11% and the risk-free rate of return (rRF) is 5%, what is the funds required rate of return?

Please show computations in Excel formula.