Consider the following information and then calculate the required rate of retur

Question

Consider the following information and then calculate the required rate of return for the Scientific Investment Fund. The funds%u2019 assets are as follows: Stock Investment Beta A 200,000 1.5 B 300,000 -0.5 C 500,000 1.25 D 1,000,000 0.75 The market required rate of return is 15 percent and the risk-free rate is 7 percent.   SHOW ALL WORK!! Consider the following information and then calculate the required rate of return for the Scientific Investment Fund. The funds%u2019 assets are as follows: Stock Investment Beta A 200,000 1.5 B 300,000 -0.5 C 500,000 1.25 D 1,000,000 0.75 The market required rate of return is 15 percent and the risk-free rate is 7 percent.   SHOW ALL WORK!! The market required rate of return is 15 percent and the risk-free rate is 7 percent.   SHOW ALL WORK!! Stock Investment Beta A 200,000 1.5 B 300,000 -0.5 C 500,000 1.25 D 1,000,000 0.75

Explanation / Answer

net beta = 2*1.5 + 3 * -0.5 + 5 * 1.25 + 10 *0.75 / 2 +3 +5 +10 = 0.7625

required return = 7 + 0.7625 *(15-7) = 13.1 %

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