In addition to risk-free securities, you are currently invested in the Tanglewood Fund, a broad-based fund of stocks and other securities with an expected return of 9.65% and a volatility of 29.88%. Currently, the risk-free rate of interest is 2.88%. Your broker suggests that you add a venture capital fund to your current portfolio. The venture capital fund has an expected return of 27.64%, a volatility of 73.89%, and a correlation of 0.19 with the Tanglewood Fund. Calculate the required return and use it to decide whether you should add the venture capital fund to your portfolio. Answer: The required return is...% (Round to two decimal places)

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You plan to invest in the Kish Hedge Fund, which has total capital of $500 million invested in five stocks: Stock's Beta Coefficient 0.3 1.4 2.3 1.0 E 1.3 Kish's beta coefficient can be found as a weighted average of its stocks' betas. The risk-free rate is 3%, and you believe the following probability distribution for future market returns is realistic: Stock A B III. 4.1% + (11,6%) b TV. 4.1% + (11.5%) b V. n-3.0 % + (11.6%) b) C Investment $160 million 120 million D 80 million 80 million 60 million Market Return -25% 0 13 0.2 32 0.1 55 a. What is the equation for the Security Market Line (SML)? (Hint: First determine the expected market return.) 1.5.2% + (10.5%) b II. n-3.0%+ (11.5%) b Probability 0.1 0.2 0.4 -Select B b. Calculate Kish's required rate of return. Do not round intermediate calculations. Round your answer to two decimal places. % c. Suppose Rick Kish, the president, receives a proposal from a company seeking new capital. The amount needed to take a position in the…

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Suppose you are the money manager of a $3.92 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta A $   360,000   1.50   B 700,000   (0.50 ) C 960,000   1.25   D 1,900,000   0.75   If the market's required rate of return is 10% 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.   %

Assume that you are the portfolio manager of the SF Fund, a $3 million hedge fund that contains the following stocks. The required rate of return on the market is 11.00% and the risk-free rate is 2.00%. What rate of return should investors expect (and require) on this fund? Do not round your intermediate calculations. Stock A B C D 11.16% 10.82% 9.93% 9.37% 9.71% Amount $1,075,000 $675,000 $750,000 $500,000 $3,000,000 Beta 1.20 0.50 1.40 0.75

Suppose that a mutual fund manager has a $20 million portfolio with a beta of 1.7. Also suppose that the risk free rate is 4.5% and the market risk premium is 5%. The manager expects to receive an additional $5 million, which is to be invested in a number of new stocks to add to the portfolio. After these stocks are added, the manager would like the fund's required rate of return to be 12%. For notation, let represent the required return, let RF represent the risk free rate, let b represent the beta of a group of stocks, and m represent the market return. According to the video, which equation most closely describes the security market line (SML)? OT=TRE+bx (M + TRF) O TRE-6x (rM - TRF) Or=TRF + TM-TRF ORF + bx (rM - TRF) Hint: Recall that the manager wants the new required rate of return for the portfolio to remain at 12%. Using the equation you just identified, and plugging in the relevant information, yields a beta of the portfolio, after the new stocks have been added, of…

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Suppose you are the money manager of a $5.56 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta A $   380,000   1.50   B 800,000   (0.50 ) C 1,480,000   1.25   D 2,900,000   0.75   If the market's required rate of return is 10% and the risk-free rate is 4%, 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 $5.39 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta A $   340,000                                 1.50 B 720,000                                 (0.50) C 1,380,000                                 1.25 D 2,950,000                                 0.75 If the market's required rate of return is 12% 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.