Question

5)

Suppose you are the money manager of a $4.16 million investment fund. The fund consists of four stocks with the following investments and betas:

Stock	Investment		Beta
A	$   280,000		1.50
B	800,000		(0.50	)
C	1,080,000		1.25
D	2,000,000		0.75

If the market's required rate of return is 11% and the risk-free rate is 4%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.

6)

Given the following information, determine the beta coefficient for Stock L that is consistent with equilibrium:  = 10.5%; r_RF = 5.5%; r_M = 10.5%. Round your answer to two decimal places.

Answer 1