Required rate of return

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Required Rate of Return

Suppose rRF = 4%, rM = 10%, and rA = 14%.

a. Calculate Stock A's beta. Round your answer to two decimal places.

b. If Stock A's beta were 1.8, then what would be A's new required rate of return? Round your answer to two decimal places.

Problem

Portfolio Required Return

Suppose you manage a $4.225 million fund that consists of four stocks with the following investments:

Stock Investment Beta

A $460,000  1.50

B 675,000  -0.50

C 1,140,000  1.25

D 1,950,000  0.75

If the market's required rate of return is 13% and the risk-free rate is 5%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.

Reference no: EM132355794

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