Suppose you are the money manager of a $4.42 million investment fund. The fund consists of four stocks with the following investments and betas:StockABCDBetaInvestment$360,000600,0001,160,0001.50(0.50)1.252,300,0000.75If 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 totwo decimal places.%

The concept of CAPM will be applied here. CAPM stands for capital asset pricing model.

Suppose you are the money manager of a $4.42 million investment fund. The fund consists of four stocks with the following investments and betas: Stock A B C D Beta Investment $360,000 600,000 1.50 (0.50) 1.25 1,160,000 2,300,000 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. %

Suppose you are the money manager of a $4.42 million investment fund. The fund consists of four stocks with the following investments and betas: Stock A B C D Beta Investment $360,000 600,000 1.50 (0.50) 1.25 1,160,000 2,300,000 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. %

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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