Curious George, a mutual fund manager, has a P40 million portfoio with a beta of 1.00. The risk-free rate is 4.25%, and the market risk premium is 6.00%. Hazel expects to receive an additional P60 million, which she plans to invest in additionai stocks. After investing the additional funds, he wants the fund's required and expected return to be 13.00%. What must the average beta of the new stocks be to achieve the target required rate of return? a. 1.68 b. 1.76 с. 1.85 d. 1.94 e. 2.04

Curious George, a mutual fund manager, has a P40 million portfoio with a beta of 1.00. The risk-free rate is 4.25%, and the market risk premium is 6.00%. Hazel expects to receive an additional P60 million, which she plans to invest in additionai stocks. After investing the additional funds, he wants the fund's required and expected return to be 13.00%. What must the average beta of the new stocks be to achieve the target required rate of return? a. 1.68 b. 1.76 с. 1.85 d. 1.94 e. 2.04

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Curious George, a mutual fund manager, has a P40 million portfolio with a beta of 1.00. The risk-free rate is 4.25%, and the market risk premium is 6.00%. Hazel expects to receive an additional P60 million, which she plans to invest in additionai stocks. After investing the additional funds, he wants the fund's required and expected return to be 13.00%. What must the average beta of the new stocks be to achieve the target required rate of return? a. 1.68 b. 1.76 c. 1.85 d. 1.94 e. 2.04
You manage an equity fund with an expected risk premium of 8% and an expected standard deviation of 10%. The rate on Treasury bills is 5%. Your client chooses to invest OMR70,000 of her portfolio in your equity fund and OMR30,000 in a T-bill money market fund. What is the expected return and standard deviation of return on your client's portfolio?
A mutual fund manager has a $40.00 million portfolio with a beta of 1.00. The risk-free rate is 4.25%, and the market risk premium is 6.00%. The manager expects to receive an additional $29.50 million which she plans to invest in additional stocks. After investing the additional funds, she wants the fund's required and expected return to be 13.00%. What must the average beta of the new stocks be to achieve the target required rate of return? Do not round your intermediate calculations. (show the work on a scrap paper) a. 2.08 b. 2.18 c. 2.60 d. 1.66 e. 1.87
You manage an equity fund with an expected risk premium of 11.2% and a standard deviation of 26%. The rate on Treasury bills is 4.2%. Your client chooses to invest $70,000 of her portfolio in your equity fund and $30,000 in a T-bill money market fund. What are the expected return and standard deviation of your client’s portfolio? (Round your answers to 2 decimal places.)
Hazel Morrison, a mutual fund manager, has a $40 million portfolio with a beta of 1.00. The risk-free rate is 4.25%, and the market risk premium is 6.00%. Hazel expects to receive an additional $60 million, which she plans to invest in additional stocks. After investing the additional funds, she wants the fund's required and expected return to be 13.00%. What must the average beta of the new stocks be to achieve the target required rate of return? 1.68 1.76 1.85 1.94 2.04
You manage an equity fund with an expected risk premium of 14% and a standard deviation of 54%. The rate on Treasury bills is 6.8%. Your client chooses to invest $120,000 of her portfolio in your equity fund and $30,000 in a T-bill money market fund.(1) What is the expected return and standard deviation of return on your client’s portfolio?(2) What is the reward-to-volatility ratio for the equity fund?(3) What is the risk-aversion index of your client?
A mutual fund manager has a $450 million portfolio with a beta of 1.20. The risk-free rate is 2.5%, and the market risk premium is 5.00%. The manager expects to receive an additional $150 million which she plans to invest in several different stocks. After investing the additional funds, she wants to reduce the portfolio's risk level so that once the additional funds are invested the portfolio's required return will be 7.50%. What must the average beta of the new stocks added to the portfolio be (not the new portfolio's beta) to achieve the desired required rate of return?
A mutual fund manager has a 30 million portfolio with a beta of 1.5. The risk free rate is 4% and the market risk premium is 6%. 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
A mutual fund manager expects her portfolio to earn a rate of return of 11% this year. The beta of her portfolio is 0.9. The rate of return available on risk-free assets is 4% and you expect the rate of return on the market portfolio to be 14%. a. What expected rate of return would you demand before you would be willing to invest in this mutual fund? Note: Do not round intermediate calculations. Enter your answer as a whole percent. b. Is this fund attractive to you? a. "Expected rate of return b. Is this fund attractive to you? %
You manage an equity fund with an expected risk premium of 14% and a standard deviation of 54%. The rate on Treasury bills is 6.8%. Your client chooses to invest $120,000 of her portfolio in your equity fund and $30,000 in a T-bill money market fund.1. What is the risk-aversion index of your client?
A mutual fund manager has a $20 million portfolio with a beta of 1.7.The risk-free rate is 4.5%, and the market risk premium is 7%. The manager expects toreceive an additional $5 million, which she plans to invest in a number of stocks. Afterinvesting the additional funds, she wants the fund’s required return to be 15%. Whatshould be the average beta of the new stocks added to the portfolio?
You manage an equity fund with an expected risk premium of 10% and an expected standard deviation of 14%. The rate on Treasury bills is 6%. Your client chooses to invest Php60,000 of her portfolio in your equity fund and Php40,000 in a T-bill money market fund. What is the expected return and standard deviation of return on your client's portfolio? ER- 8.4% and SD- 8.4% ER- 8.4% and SD- 14% ER- 12% and SD- 8.4% ER- 12% and SD- 14%

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