Required rate of return on a stock

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1. An individual has $45,000 invested in a stock with a beta of 0.4 and another $60,000 invested in a stock with a beta of 1.5. If these are the only two investments in her portfolio, what is her portfolio's beta? Round your answer to two decimal places.

2. Suppose you manage a $3.98 million fund that consists of four stocks with the following investments: Stock Investment Beta A $260,000 1.50 B 650,000 -0.50 C 1,220,000 1.25 D 1,850,000 0.75 If the market's required rate of return is 12% and the risk-free rate is 4%, what is the fund's required rate of return? Round your answer to two decimal places.

3. Assume that the risk-free rate is 6.5% and that the market risk premium is 6%. What is the required rate of return on a stock with a beta of 0.8? Round your answer to two decimal places. % What is the required rate of return on a stock with a beta of 2.2? Round your answer to two decimal places.

Reference no: EM13822104

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