Suppose you are the money manager of a $4.82 millioninvestment fund. The fund consists of four stocks with the following investments and betas:Stock          Investment               BetaA               $ 460,000                 1.50B               500,000                    (0.50)C               1,260,000                1.25D                 2,600,000              0.75If the market’s required rate of return is 8% and the risk-free rate is 4%, what is the fund’s required rate of return?

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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Suppose you are the money manager of a $4.82 million
investment fund. The fund consists of four stocks with the following investments and betas:
Stock          Investment               Beta
A               $ 460,000                 1.50
B               500,000                    (0.50)
C               1,260,000                1.25
D                 2,600,000              0.75
If the market’s required rate of return is 8% and the risk-free rate is 4%, what is the fund’s required rate of return?

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