Consider the following information and then calculate the required rate of return for the Scientific Investment...
Consider the following information and then calculate the
required rate of return for the Scientific Investment Fund, which
holds 4 stocks. The market's required rate of return is
13%, the risk-free rate is 6%,
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 |
1.0 |
Round it to two decimal places without the percent sign
(%), e.g., 13.56.
Homework Answers
Portfolio Beta
=(200000/2000000)*1.50+(300000/2000000)*(-0.50)+(500000/2000000)*1.25+(1000000/2000000)*1.00
=0.8875
calculate the required rate of return for the Scientific Investment Fund
=Rf+beta*(market rate-Rf)
=6%+0.8875*(13%-6%)
=12.21%
the above is answer..
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Consider the following information and then calculate the
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