A portfolio manager is holding the following investments: Stock Amount Invested Beta X RM10 million 1.4 Y 20 million 1.0 40 million 0.8 The manager plans to sell his holdings of Stock Y. The money from the sale will be used to purchase another RM15 million of Stock X and another RM5 million of Stock Z. The risk-free rate is 5 percent and the market risk premium is 5.5 percent. How many percentage points higher will the required return on the portfolio be after he completes this transaction?

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Q: Define the term internal rate of return?

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Q: How would the risk premium work out for a riskier investment?

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Q: What are quantitative measurements versus non-quantitative measurements with respect to risk?

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Q: What role does MAD play in evaluating a forecasting model?

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