If the market's required rate of return is 10% and the risk-free rate is 6%, what is the fund's required rate of return? Do

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter2: Risk And Return: Part I
Section: Chapter Questions
Problem 10P
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Suppose you are the money manager of a $5.08 million investment fund. The fund consists of four stocks with the
following investments and betas:
Stock Investment Beta
$ 440,000
A
B
C
D
0.75
If the market's required rate of return is 10% and the risk-free rate is 6%, what is the fund's required rate of return? Do not
round intermediate calculations. Round your answer to two decimal places.
500,000
1,140,000
3,000,000
1.50
(0.50 )
1.25
Transcribed Image Text:Suppose you are the money manager of a $5.08 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta $ 440,000 A B C D 0.75 If the market's required rate of return is 10% and the risk-free rate is 6%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places. 500,000 1,140,000 3,000,000 1.50 (0.50 ) 1.25
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