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?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter2: Risk And Return: Part I
Section: Chapter Questions
Problem 10P
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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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