Consider the following information for the Alachua Retirement Fund, with a total investment of $4 million. [5] Stock Investment Beta A $ 400,000 1.2 B 600,000 -0.4 C 1,000,000 1.5 D 2,000,000 0.8 The market required rate of return is 12 percent, and the risk-free rate is 6 percent. What is its required rate of return? Stock A has the following probability distribution of expected returns: [5] Probability Rate of Return 0.1 -15% 0.2 0 0.4 5 0.2 10 25 What is Stock A’s coefficient of variation? What is Stock T’s coefficient of variation? [5] Year Rt 2002 15% 2003 20% 2004 9% 2005 10% 2006 5%
- Consider the following information for the Alachua Retirement Fund, with a total investment of $4 million. [5]
Stock Investment Beta
A $ 400,000 1.2
B 600,000 -0.4
C 1,000,000 1.5
D 2,000,000 0.8
The market required
What is its required rate of return?
- Stock A has the following probability distribution of expected returns: [5]
Probability Rate of Return
0.1 -15%
0.2 0
0.4 5
0.2 10
- 25
What is Stock A’s coefficient of variation?
- What is Stock T’s coefficient of variation? [5]
|
Year |
Rt |
|
2002 |
15% |
|
2003 |
20% |
|
2004 |
9% |
|
2005 |
10% |
|
2006 |
5% |
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