Question

A project under consideration has an internal rate of return of 16% and a beta of 0.5. The risk-free rate is 6%, and the expected rate of return on the market portfolio is 16%.

**a.** What is the required rate of return on the
project? **(Do not round intermediate calculations. Enter
your answer as a whole percent.)**

**b.** Should the project be accepted?

**c.** What is the required rate of return on the
project if its beta is 1.50? **(Do not round intermediate
calculations. Enter your answer as a whole percent.)**

**d.** If project's beta is 1.50, should the
project be accepted?

Answer #1

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A project under consideration has an internal rate of return of
17% and a beta of 0.5. The risk-free rate is 9%, and the expected
rate of return on the market portfolio is 17%.
a. What is the required rate of return on the
project? (Do not round intermediate calculations. Enter
your answer as a whole percent.)
b. Should the project be accepted?
c. What is the required rate of return on the
project if its beta is 1.50? (Do...

A project under consideration has an internal rate of return of
14% and a beta of 0.8. The risk-free rate is 4%, and the expected
rate of return on the market portfolio is 14%.
a. What is the required rate of return on the
project? (Do not round intermediate calculations. Enter
your answer as a whole percent.)
b. Should the project be accepted? Yes or
No?
c. What is the required rate of return on the
project if its beta...

Marielle Machinery Works forecasts the following cash flows on a
project under consideration. It uses the internal rate of return
rule to accept or reject projects.
C0 C1 C2 C3 −
$ 10,200 0 + $ 7,700 + $ 8,700
Calculate the IRR. (Do not round intermediate calculations.
Enter your answer as a percent rounded to 2 decimal places.)
IRR % ?
Should this project be accepted if the required return is
14%?
Yes No

CAPM and portfolio return
You have been managing a $5 million portfolio that has a beta of
1.50 and a required rate of return of 16%. The current risk-free
rate is 6.50%. Assume that you receive another $500,000. If you
invest the money in a stock with a beta of 1.75, what will be the
required return on your $5.5 million portfolio? Do not round
intermediate calculations. Round your answer to two decimal
places.

A mutual fund manager expects her portfolio to earn a rate of
return of 14% this year. The beta of her portfolio is 0.9. The rate
of return available on risk-free assets is 6% and you expect the
rate of return on the market portfolio to be 16%. What expected
rate of return would you demand before you would be willing to
invest in this mutual fund? (Do not round intermediate
calculations. Enter your answer as a whole percent.)

PORTFOLIO BETA
A mutual fund manager has a $20 million portfolio with a beta of
1.50. The risk-free rate is 6.50%, and the market risk premium is
4.5%. The manager expects to receive an additional $5 million,
which she plans to invest in a number of stocks. After investing
the additional funds, she wants the fund's required return to be
17%. What should be the average beta of the new stocks added to the
portfolio? Do not round intermediate calculations....

A stock has a beta of 1.20 and an expected return of 14 percent.
a risk-free asset currently earns 3 percent.
What is the expected return on a portfolio that is equally
invested in the two assets? ( do not round intermediate
calculations and round your answer to 2 decimal places)
If a portfolio of the two assets has a beta of .72 ,what are the
portfolio weights?( do not round intermediate calculations and
round your answer to 4 decimal...

A.)
A mutual fund manager has a $20 million portfolio with a beta of
1.50. The risk-free rate is 4.00%, and the market risk premium is
7.0%. The manager expects to receive an additional $5 million,
which she plans to invest in a number of stocks. After investing
the additional funds, she wants the fund's required return to be
17%. What should be the average beta of the new stocks added to the
portfolio? Do not round intermediate calculations. Round...

Problem 8-16
CAPM and portfolio return
You have been managing a $5 million portfolio that has a beta of
1.15 and a required rate of return of 11%. The current risk-free
rate is 4.75%. Assume that you receive another $500,000. If you
invest the money in a stock with a beta of 1.30, what will be the
required return on your $5.5 million portfolio? Do not round
intermediate calculations. Round your answer to two decimal
places.
%

A stock has a beta of 0.7 and an expected return of 11.1
percent. If the risk-free rate is 4.7 percent, what is the market
risk premium? (Do not round intermediate calculations. Enter your
answer as a percent rounded to 2 decimal places.)

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