Required rate of return

Assignment Help Finance Basics
Reference no: EM132355794

Required Rate of Return

Suppose rRF = 4%, rM = 10%, and rA = 14%.

a. Calculate Stock A's beta. Round your answer to two decimal places.

b. If Stock A's beta were 1.8, then what would be A's new required rate of return? Round your answer to two decimal places.

Problem

Portfolio Required Return

Suppose you manage a $4.225 million fund that consists of four stocks with the following investments:

Stock Investment Beta

A $460,000  1.50

B 675,000  -0.50

C 1,140,000  1.25

D 1,950,000  0.75

If the market's required rate of return is 13% 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.

Reference no: EM132355794

Questions Cloud

Build code to ask the user to enter course code and quota : Design a loop to manage this course. In the loop, ask the user to enter 1 for adding a student, 2 for dropping a student, 3 for displaying course info.
Component cost of debt for use in the wacc calculation : Kenny Electric Company's noncallable bonds were issued several years ago and now have 20 years to maturity. These bonds have a 9.25%
Best price movement potential : The market rate of interest (discount rate) is 8 percent. Which bond has the best price movement potential? Use duration to answer the question.
We have personal expenses along with micro expenses : We have personal expenses along with micro expenses. People don't realize that micro expenses so add up if you look at it on weekly or monthly basis.
Required rate of return : If Stock A's beta were 1.8, then what would be A's new required rate of return? Round your answer to two decimal places.
Present value of an ordinary? annuity : What is the present value of ?$2 comma 000 per year for 9 years discounted back to the present at 11 ?percent?
What is the present value of the? liability : If the appropriate discount rate is 8 ?percent, what is the present value of the? liability?
Calculate the amount of money that will accumulate : Calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 3?, 7?, and 17 ?year(s).
What is the expected return on portfolio : The relevant risk -free rate is 7%, and the expected return on the market portfolio is 18%. What is the expected return on your portfolio?

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd