In addition to risk-free securities, you are currently invested in the Tanglewood Fund, a broad-based fund of stocks and other securities with an expected return of 9.65% and a volatility of 29.88%. Currently, the risk-free rate of interest is 2.88%. Your broker suggests that you add a venture capital fund to your current portfolio. The venture capital fund has an expected return of 27.64%, a volatility of 73.89%, and a correlation of 0.19 with the Tanglewood Fund. Calculate the required return and use it to decide whether you should add the venture capital fund to your portfolio. Answer: The required return is...% (Round to two decimal places)

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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In addition to risk - free securities, you are currently invested in the Tanglewood Fund, a broad-based fund of stocks and
other securities with an expected return of 9.65% and a volatility of 29.88% . Currently, the risk-free rate of interest is
2.88%. Your broker suggests that you add a venture capital fund to your current portfolio. The venture capital fund has
an expected return of 27.64%, a volatility of 73.89%, and a correlation of 0.19 with the Tanglewood Fund. Calculate the
required return and use it to decide whether you should add the venture capital fund to your portfolio. Answer: The
required return is... % (Round to two decimal places)
Transcribed Image Text:In addition to risk - free securities, you are currently invested in the Tanglewood Fund, a broad-based fund of stocks and other securities with an expected return of 9.65% and a volatility of 29.88% . Currently, the risk-free rate of interest is 2.88%. Your broker suggests that you add a venture capital fund to your current portfolio. The venture capital fund has an expected return of 27.64%, a volatility of 73.89%, and a correlation of 0.19 with the Tanglewood Fund. Calculate the required return and use it to decide whether you should add the venture capital fund to your portfolio. Answer: The required return is... % (Round to two decimal places)
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