Problema mutual fund manager expects her portfolio to earn, Ask an Expert

Accounting

Problem:

A mutual fund manager expects her portfolio to earn a rate of return of 8% this year. The beta of her portfolio is .8. Assume rate of return available on risk-free assets is 6% and you expect the rate of return on the market portfolio to be 16%.

Required:

Question 1: Calculate the expected rate of return that investors will demand of the portfolio.

Question 2: Should you invest in this mutual fund?

Note: Show supporting computations in good form.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91166791

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