Suppose you are the money manager of an Rs.8 million investment fund. The fund consists of 4 stocks with the following investments and betas: Stock Investment Beta A Rs.800,000 1.2 B 1200,000 (0..3) C 2,000,000 1.0 D 4,000,000 0.6 If the market required rate of return is 13.5 percent and the risk-free rate is 5.5 percent, what is the fund's required rate of return?
Suppose you are the money manager of an Rs.8 million investment fund. The fund consists of 4 stocks with the following investments and betas: Stock Investment Beta A Rs.800,000 1.2 B 1200,000 (0..3) C 2,000,000 1.0 D 4,000,000 0.6 If the market required rate of return is 13.5 percent and the risk-free rate is 5.5 percent, 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
Section: Chapter Questions
Problem 1PS
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Suppose you are the money manager of an Rs.8 million investment fund. The fund consists of 4 stocks with the following investments and betas:
|
Stock |
Investment |
Beta |
|
A |
Rs.800,000 |
1.2 |
|
B |
1200,000 |
(0..3) |
|
C |
2,000,000 |
1.0 |
|
D |
4,000,000 |
0.6 |
- If the market required
rate of return is 13.5 percent and the risk-free rate is 5.5 percent, what is the fund's required rate of return?
Change the weightages of the investments with your own consent to increase the rate of return and also interpret your answer in a logica
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