Answered: beta coefficient of the investment fund

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Finance

beta coefficient of the investment fund

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter8: Risk And Rates Of Return

Section: Chapter Questions

Problem 8PROB

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Question

Question 7

The Amelia Knight investment fund has a total capital of R120 000 invested in three shares:

SharesReturnInvestedTechnological Sector25%R60 000Education Sector13%R30 000Mining Sector20%R30 000

The current risk-free rate is 5,5%. Market returns have the following estimated probability distribution for the next period:

ProbabilityMarket return0,3–10%0,1 14%0,2 15%0,4 18%

What is the beta coefficient of the investment fund?

1. 0,52

2. 0,80

3. 1,82

4. 4,92

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