Stock Stock's Beta Coefficient A 0.6 B 1.6 C 1.8 D 1.0 E 1.5 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 market returns is realistic: Investment $160 million 120 million 80 million 80 million 60 million Probability 0.1 0.2 Market Return -26% 0 11 29 46 a. What is the equation for the Security Market Line (SML)? (Hint: First determine the expected market return.) I. n = 5.0 % + (7.2%) b II. n = 4.6 % + (7.0%)bi III. n = 5.0% + (5.7%) bi IV. n = 7.6 % + (7.2%) bi V. n = 7.6% + (5.7%) b % 0.4 0.2 0.1 -Select- b. Calculate Kish's required rate of return. Do not round intermediate calculations. Round your answer to two decimal places. % c. Suppose Rick Kish, the president, receives a proposal from a company seeking new capital. The amount needed to take a position in the stock is $50 million, it has an expected return of 17%, and its estimated beta is 1.4. Should Kish Invest in the new company? The new stock -Select- be purchased. At what expected rate of return should Kish be indifferent to purchasing the stock? Round your answer to two decimal places..

Kish's beta coefficient can be found as a weighted average of its stocis' betas. The rich free rate is 5%, and you believe the following probability distribution for future murket. returns is realistic: a. What is the equation for the Securty Market Une (5ML)? (Hinti First determine the expected market return.) I. n=5.0%+(7.2%)b1 II. n=4.6%+(7.0%)b III. n=5.0%+(5,7%) a IV n=7.6%+(7.246)6 v. n=7.6%+(5.7%6)bi b. Calculate Kistis required rate of return. Do not round internediate calculations. Round your answer to tws decimat places. expected return of 17% and its estimated beto is 1.4 . Shovld kosh invest in the new company? The onw stock I be purchased. As what expected rate of return should Kish be indifferent to purchasing the stecco Round your answer to two decimal places