Suppose you are the money manager of a $4 million investment fund The fund consists of four stocks with the following investments and betas If the markets required rate of return is 14 and the risk free rate is 6 , what is the funds required rate of return Beta Stock Investment $ 400,000 A 1 50 B 6...

Alternative solution First calculate the return for each stock using the CAPM equat ...

Suppose you are the money manager of a $4 million investment fund. The fund consists of four

Question:

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

Beta Stock Investment $ 400,000 A 1.50 B 600,000 (0.50) 1.25 1,000,000 2,000,000 D 0.75

If the market’s required rate of return is 14% and the risk-free rate is 6%, what is the fund’s required rate of return?

Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...