Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:Suppose you are the money manager of a $4.86
million investment fund. The fund consists of four
stocks with the following investments and betas:
Stock
Investment
Beta
A
$ 280,000
1.50
В
700,000
(0.50)
1,380,000
1.25
2,500,000
0.75
If the market's required rate of return is 11% and
the risk-free rate is 6%, what is the fund's required
rate of return? Do not round intermediate
calculations. Round your answer to two decimal
places.
22.65
%
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- Raghubhaiarrow_forwardYou have been given the following return information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is .97. Year Fund Market Risk-Free 2015 −18.80 % −36.50 % 1 % 2016 25.10 20.70 6 2017 13.60 13.00 2 2018 7.00 8.40 6 2019 −1.92 −4.20 2 Calculate Jensen’s alpha for the fund, as well as its information ratio. (Do not round intermediate calculations. Enter the alpha as a percent rounded to 2 decimal places. Round the ratio to 4 decimal places.)arrow_forwardSuppose 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.arrow_forward
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