Question

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	$   380,000		1.50
B	800,000		(0.50	)
C	1,180,000		1.25
D	1,800,000		0.75

If the market's required rate of return is 9% 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.

Answer 1

Required rate= rf rate+portfolio beta*risk premium =4%+0.72*(9%-4%) =7.60%

Calc:-