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CAPM and portfolio return
You have been managing a $5 million portfolio that has a beta of 1.95 and a required rate of return of 12%. The current risk-free rate is 5.75%. Assume that you receive another $500,000. If you invest the money in a stock with a beta of 1.60, what will be the required return on your $5.5 million portfolio? Do not round intermediate calculations. Round your answer to two decimal places.
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Doublewide Dealers has an ROA of 12%, a 6% profit margin, and an ROE of 19%. What is its total assets turnover? Round your answer to two decimal places. What is its equity multiplier?
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