2. Suppose you are the money manager of a $4.96 million investment fund. The fund consists of four stocks with the following investments and betas:StockInvestmentBetaA$ 580,0001.50B800,000(0.50)C980,0001.25D2,600,0000.75If the market's required rate of return is 11% 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.

Portfolio Beta is a measure of the overall systematic risk of a portfolio of investments. It equals…

Answered: f the market's required rate of return…

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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2. Suppose you are the money manager of a $4.96 million investment fund. The fund consists of four stocks with the following investments and betas:

Stock	Investment	Beta
A	$ 580,000	1.50
B	800,000	(0.50)
C	980,000	1.25
D	2,600,000	0.75

If the market's required rate of return is 11% 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.

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