What is the required return on the terrapins fund

Assignment Help Financial Management

Reference no: EM131888602

1. The Terrapins Investment Fund has a total investment of $500 million in five stocks.

Stock Investment (millions) Beta

1 $150 .6

2 120 1.2

3 80 3.0

4 90 1.8

5 60 1.0

Total $500

What is the fund’s overall, or weighted average, beta?

Refer to the previous problem. If the risk-free rate is 12% and the market risk premium is 6%, what is the required return on the Terrapins Fund?

2. Suppose MGM has a beta of 3.32 and AEP has a beta of 0.28. If the risk-free interest rate = 4.0% and the market risk premium = 10%, according to the CAPM:

What is the expected return of MGM stock?

What is the expected return of AEP stock?

What is the beta of a portfolio that consists of 60% of MGM and 40% of AEP?

What is the expected return of that portfolio with the beta that you found in part c.?

What is the beta of a portfolio that consists of 40% of MGM and 60% of AEP?

Reference no: EM131888602

Questions Cloud

Toxicology or environmental epidemiology : What interactions does Environmental Law have with the other two disciplines, such Toxicology or Environmental Epidemiology?

Identify an environmental issue facing your community : Identify an environmental issue facing your community. How energy and materials flow in your local ecosystem and how this is related to your selected issue.

Environmental law in environmental health and safety : What aresome evaluation of types of control methods commonly used by Environmental Law in Environmental Health and Safety.

Financial statements of american : Write a paper in APA format and compare and contrast current (2017) financial statements of American, Delta, and United.

What is the required return on the terrapins fund : If the risk-free rate is 12% and the market risk premium is 6%, what is the required return on the Terrapins Fund?

Centralize all data to the corporate data center : Which software requirement model would be most beneficial for a chain of 20 restaurants with the following requirements:

Read the posts of two peers and respond to : Read the posts of two peers and respond to at least two. Try to choose those that have had the fewest responses thus far.

Describe what are the benefits of being a member of the wto : Describe What are the benefits of being a member of the WTO? What is the WTO, and what is its history? What are the disadvantages? How does it settle disputes?

Nominal convertible semi-annually : A stock is currently selling at 80 per share to yield 10 % nominal convertible semi-annually. The stock is expected to pay dividends at end of each year forever

User Account

All Pages