Question: (Use the following data to answer the next two questions.) A newly developed fund has total capital of $5 million invested in five stocks. Stock
(Use the following data to answer the next two questions.) A newly developed fund has total capital of $5 million invested in five stocks. Stock Investment Stock's Beta $1.5 million 0.8 million 0.7 million 1.0 million 1.0 million A B D E 0.5 0.8 1.4 1.6 1.8 The current risk-free rate is 2 percent, whereas market returns have the following estimat probability distribution for the next period: Probability 0.1 0.2 0.4 Market Return 10% 12% 13% 16% 17% 0.2 0.1 24. Compute the fund's required rate of return for the next period. 25. Suppose there is an investment opportunity with its beta coefficient of 1.8. Currently, the expected return on the opportunity is 15%. Would you invest in the opportunity
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