Khadijah was the top fund manager who manages an equity portfolio at Bank Islam Berhad. Despite the world's promising economic condition, she believes that the domestic market is still unstable and anticipates it to continue a downtrend till mid of year 2020. The investment analyst informed her that the investment fund in the following: (b) Economic Condition Price per Unit Recession Number of Share Beta RM1,228.88 1.59 18,080 16,070 9,600 Normal RM838.50 2.01 0.65 Вoom RM450.89 The current Treasury Bill is 9.2 percent and market portfolio is 13.7 percent. Based on the information above: i. Calculate the required rate of return. ii. Khadijah has analyzed that there are several risk factors that drive the return on the share market as follows: Risk Factor Investment Pandemic 7.8 Oil Price GDP Inflation Market return (%) 5.5 1.87 4.43 5.2 Beta 1.21 0.9 2.6 The risk-free rate is 3.98 percent, calculate the required rate of return on the share.
Khadijah was the top fund manager who manages an equity portfolio at Bank Islam Berhad. Despite the world's promising economic condition, she believes that the domestic market is still unstable and anticipates it to continue a downtrend till mid of year 2020. The investment analyst informed her that the investment fund in the following: (b) Economic Condition Price per Unit Recession Number of Share Beta RM1,228.88 1.59 18,080 16,070 9,600 Normal RM838.50 2.01 0.65 Вoom RM450.89 The current Treasury Bill is 9.2 percent and market portfolio is 13.7 percent. Based on the information above: i. Calculate the required rate of return. ii. Khadijah has analyzed that there are several risk factors that drive the return on the share market as follows: Risk Factor Investment Pandemic 7.8 Oil Price GDP Inflation Market return (%) 5.5 1.87 4.43 5.2 Beta 1.21 0.9 2.6 The risk-free rate is 3.98 percent, calculate the required rate of return on the share.
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
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:(b)
Despite the world's promising economic condition, she believes that the domestic market is still
unstable and anticipates it to continue a downtrend till mid of year 2020. The investment analyst
informed her that the investment fund in the following:
Khadijah was the top fund manager who manages an equity portfolio at Bank Islam Berhad.
Number of Share
Economic Condition Price per Unit
Recession
Beta
RM1,228.88
18,080
16,070
9,600
1.59
Normal
RM838.50
2.01
Вoom
RM450.89
0.65
The current Treasury Bill is 9.2 percent and market portfolio is 13.7 percent. Based on the
information above:
i. Calculate the required rate of return.
ii. Khadijah has analyzed that there are several risk factors that drive the return on the share market
as follows:
Risk Factor
Investment
Pandemic
7.8
Oil Price
GDP
Inflation
Market return (%)
4.43
5.2
5.5
Beta
1.21
0.9
1.87
2.6
The risk-free rate is 3.98 percent, calculate the required rate of return on the share.
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