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Suppose you are managing a $4 million investment fund. The fund’s portfolio consists of four stocks with the following investments and betas:

Stock Investment Beta

A $ 200,000 1.2

B 400,000 -0.6

C 1,400,000 1.5

D 2,000,000 0.5

a. Calculate the portfolio weight for each individual stock.

b. Calculate the portfolio beta.

c. If the market’s required rate of return is 7% and the risk-free rate is 2%, what is the fund’s required rate of return?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92725272

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