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- Ms Pau Cam has a Php40-million portfolio with a beta of 1.20. The risk- free rate is 5%, and the market risk premium is 6%. Ms. Pau expects to receive an additional Php40 million which she plans to invest in the stock market. After investing the additional funds, she wants the fund’s required and expected return to be 15%. What must be the average beta of the new stock to reach the target required rate of return?A company's fund manager has a P20,000,000 portfolio with a beta of 0.75. The risk-free rate is 4.50% and the market risk premium is 5.00%.The manager expects to receive an additional P30,000,000, which she plans to invest in several stocks. After investing the additional funds, she wants the fund's required return to be 9.50%. 1. What is the required rate of return on the initial P20M investment? 2. What is the rate of return of all risky and risk-free securities? 3. To achieve the fund manager’s required return target, the funds should be invested in an investment with a beta of 4. Judge the overall riskiness of the P50M portfolio A. Aggressive B. Neutral C. ConservativeA fund manager has a well-diversified portfolio that mirrors the performance of the S&P 500and is worth $240 million. The value of the S&P 500 is 4,800, and the portfolio manager wouldlike to obtain insurance against a reduction of more than 3% in the value of the portfolio over thenext four months. The risk-free interest rate is 6% per annum. The dividend yield on both theportfolio and the S&P 500 is 4%, and the volatility of the index is 35% per annum. What amount(in dollars) of the portfolio should be sold and kept in risk-free securities for portfolio insurance?
- Mr. Scared, a portfolio manager has a P10 million portfolio, which consist of P1 million invested in 10 separate stocks. The portfolio beta is 1.2. The risk free rate is 5% and the market risk premium is 6%. What is the portfolio’s required rate of return? Given the same details of Mr. Scared's case, what is the new required return of his portfolio using CAPM if he sells one of the stocks in his portfolio for P1 million which has a beta of 0.9 and uses the P1 million to purchase a new stock that has a beta of 1.6?Assume that you manage a $10.00 million mutual fund that has a beta of 1.05 and a 9.50% required return. The risk-free rate is 2.20%. You now receive another $11.50 million, which you invest in stocks with an average beta of 0.65. What is the required rate of return on the new portfolio?Assume the price of the Schwab Small-Cap index fund is $50 per share, the annual expected return is 18%, and the annual standard deviation is 0.24. Assume you have $10,000 of investment equity and you want to buy the Schwab Small-Cap fund on margin such that your total portfolio standard deviation is 0.30. Assume you can borrow at 8% annually. What is the portfolio weight in the Small-Cap index fund such that the standard deviation of your portfolio is 0.30? Group of answer choices: A) 1.25 B) .75 C) -.25 D) 1
- You plan to invest in the Kish Hedge Fund, which has total capital of $500 million invested in five stocks: Stock Investment Stock’s Beta Coefficient A $160 million 0.5 B 120 million 1.2 C 80 million 1.8 D 80 million 1.0 E 60 million 1.6 Kish’s beta coefficient can be found as a weighted average of its stocks’ betas. The risk-free rate is 6%, and you believe the following probability distribution for future market returns is realistic: Probability Market Return 0.1 –28% 0.2 0 0.4 12 0.2 30 0.1 50 (1)What is the equation for the Security Market Line (SML)? (Hint: First, determine the expected market return.) (2)Calculate Kish’s required rate of return. (3)Suppose Rick Kish, the president, receives a proposal from a company seeking new capital. The amount needed to take a position in the stock is $50 million, it has an expected return of 15%, and its estimated beta is 1.5. Should…You plan to invest in the Kish Hedge Fund, which has total capital of $500 million invested in five stocks: Stock Investment Stock's Beta Coefficient A $160 million 0.8 B 120 million 1.6 C 80 million 2.2 D 80 million 1.0 E 60 million 1.7 Kish's beta coefficient can be found as a weighted average of its stocks' betas. The risk-free rate is 4%, and you believe the following probability distribution for future market returns is realistic: Probability Market Return 0.1 -25% 0.2 0 0.4 12 0.2 29 0.1 51 1. What is the equation for the Security Market Line (SML)? (Hint: First determine the expected market return.) Select one (1) of the answers below. ri = 2.2% + (10.7%)bi ri = 4.0% + (9.2%)bi ri = 2.5% + (10.4%)bi ri = 4.0% + (10.7%)bi ri = 2.2% + (9.2%)bi Calculate Kish's required rate of return. Do not round intermediate calculations. Round your answer to two decimal places. ? % Suppose Rick Kish, the president, receives a proposal from a company…A mutual fund manager has a $450 million portfolio with a beta of 1.20. The risk-free rate is 2.5%, and the market risk premium is 5.00%. The manager expects to receive an additional $150 million which she plans to invest in several different stocks. After investing the additional funds, she wants to reduce the portfolio's risk level so that once the additional funds are invested the portfolio's required return will be 7.50%. What must the average beta of the new stocks added to the portfolio be (not the new portfolio's beta) to achieve the desired required rate of return?
- You plan to invest in the Kish Hedge Fund, which has total capital of $500 million invested in five stocks: Stock Investment Stock's Beta Coefficient A $160 million 0.7 B 120 million 1.4 C 80 million 2.1 D 80 million 1.0 E 60 million 1.4 Kish's beta coefficient can be found as a weighted average of its stocks' betas. The risk-free rate is 4%, and you believe the following probability distribution for future market returns is realistic: Probability Market Return 0.1 -26% 0.2 0 0.4 13 0.2 30 0.1 50 What is the equation for the Security Market Line (SML)? (Hint: First determine the expected market return.) ri = 5.7% + (9.6%)bi ri = 5.7% + (9.5%)bi ri = 4.0% + (9.6%)bi ri = 2.1% + (9.0%)bi ri = 4.0% + (9.5%)bi Calculate Kish's required rate of return. Do not round intermediate calculations. Round your answer to two decimal places. % Suppose Rick Kish, the president, receives a proposal from a company seeking new capital. The amount needed to take a…Assume that you manage a $12.00 million mutual fund that has a beta of 1.15 and a 9.70% required return. The risk-free rate is 2.20%. You now receive another $15 million, which you invest in stocks with an average beta of 1.05. What is the required rate of return on the new portfolio? Do not round your intermediate calculations.A mutual fund manager has a $80 million portfolio with a beta of 2.0. The risk-free rate is 4.3%, and the market risk premium is 5.5%. The manager expects to receive an additional $20 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 14%. What should be the average beta of the new stocks added to the portfolio? options: A)0.8182 B)0.7364 C)0.8591 D)0.9000 E)0.7773
