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Finding required rate of return on the given fund

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Consider the following information and then calculate the required rate of return for the Global Investment Fund, which holds 4 stocks. The market's required rate of return is 16.25%, the risk-free rate is 7.00%, and the Fund's assets are as follows:

Stock Investment Beta
A $200,000 1.50
B $300,000 -0.50
C $500,000 1.25
D $1,000,000 0.75

15.88%
15.18%
10.68%
14.05%
16.44%

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Solution Summary

Solution provides step by step method to find out the required rate of return on the given fund.

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WA=weight of stock A=200000/(200000+300000+500000+1000000)= 0.100
WB=weight of stock B=300000/(200000+300000+500000+1000000)= 0.150
WC=weight of ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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