Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. 1)the $10.00 million mutual fund henry manages has

1)The $10.00 million mutual fund Henry manages has a beta of 1.05 and a 9.50%...

60.1K

Verified Solution

Question

Accounting

1)The $10.00 million mutual fund Henry manages has a beta of 1.05 and a 9.50% required return. The risk-free rate is 4.20%. Henry now receives another $4.00 million, which he invests in stocks with an average beta of 0.65. What is the required rate of return on the new portfolio? (Hint: You must first find the market risk premium, then find the new portfolio beta.) Select the correct answer.

a. 8.76% b. 9.00% c. 8.92% d. 8.84% e. 9.08%

2)Joel Foster is the portfolio manager of the SF Fund, a $2.85 million hedge fund that contains the following stocks. The required rate of return on the market is 11.00% and the risk-free rate is 5.00%. What rate of return should investors expect (and require) on this fund? Stock Amount Beta A $1,075,000 1.20 B 675,000 0.50 C 600,000 1.40 D 500,000 0.75 2,850,000 Select the correct answer.

a. 10.86% b. 10.89% c. 10.98% d. 10.92% e. 10.95%

3)Returns for the Alcoff Company over the last 3 years are shown below. What's the standard deviation of the firm's returns? (Hint: This is a sample, not a complete population, so the sample standard deviation formula should be used.) Year Return 2010 21.00% 2009 12.50% 2008 39.60% Select the correct answer.

a. 26.37% b. 26.40% c. 26.43% d. 26.46% e. 26.49%

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students