You work as an investment associate and are asked to compute the required returns on the Scientific

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You work as an investment associate and are asked to compute the required returns on the Scientific Investment Fund. The risk-free rate is 3% and market risk premium is 7%. The fund consists of four stocks.

The funds' assets are as follows:

Stock / Investment / Beta

A / $ 120,000 / 1.20

B / 350,000 / -0.20

C / 280,000 / 1.42

D / 900,000 / 1.1

CALCULATE:

What is the portfolio beta?
What is the fund's required rate of return?

Related Book For answer-question

Financial reporting, financial statement analysis and valuation a strategic perspective

ISBN: 978-0324789416

7th Edition

Authors: James M Wahlen, Stephen P Baginskl, Mark T Bradshaw

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Posted Date: May 02, 2023 04:02 AM

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You work as an investment associate and are asked to compute the required returns on the Scientific

Question:

Expert Answer:

To calculate the portfolio beta we need to weight the beta of each stock ... View the full answer

Financial reporting, financial statement analysis and valuation a strategic perspective

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