A mutual fund manager expects her portfolio to earn a rate of return of 7% this year. The beta of her portfolio is 0.6. The rate of return available on risk-free assets is 5% and you expect the rate of return on the market portfolio to be 10%. 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? %
A mutual fund manager expects her portfolio to earn a rate of return of 7% this year. The beta of her portfolio is 0.6. The rate of return available on risk-free assets is 5% and you expect the rate of return on the market portfolio to be 10%. 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? %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![A mutual fund manager expects her portfolio to earn a rate of return of 7% this year. The beta of her portfolio is 0.6. The rate of return
available on risk-free assets is 5% and you expect the rate of return on the market portfolio to be 10%.
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?
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe6cd9eb9-87cf-45bd-976e-2110a2d765f7%2F191a916d-90de-4618-bb68-45ec16302dbe%2Fct77x4_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A mutual fund manager expects her portfolio to earn a rate of return of 7% this year. The beta of her portfolio is 0.6. The rate of return
available on risk-free assets is 5% and you expect the rate of return on the market portfolio to be 10%.
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?
%
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