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What is the fund new beta after the transaction

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Company X has a beta of 0.70, while Company Y's beta is 1.20. The required return on the stock market is 11.00%, and the risk-free rate is 4.25%. A fund has $4500 invested in company X stock and $3500 invested in the stock of company Y.

Question a) What is fund's required rate of return?

Question b) Suppose you sell all of your holdings in stock Y and invest $4500 in stock Z having beta of 1.5. What is the fund's new beta after this transaction.

Question c) Suppose inflation increases by 2.5%, what is the portfolio's required rate of return now?

Question d) Suppose risk aversion increases by 1.5%, what is the portfolio's required rate of return now?

Reference no: EM132547871

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