Question

Consider the following information for the Global Investment Fund, which holds 4 stocks. The market's required...

Consider the following information for the Global Investment Fund, which holds 4 stocks. The market's required rate of return is 13.25%, the risk-free rate is 7.00%, and the Fund's assets are as follows:

Stock

Investment

Beta

A

$ 200,000

   1.50

B

    300,000

−0.50

C

    500,000

    1.25

D

$1,000,000

    0.75
  1. What is the portfolio beta?
  2. What is the market risk premium?
  3. According to CAPM, what is the required rate of return for the fund?
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