ou plan to invest in the Kish Hedge Fund, which has total capital of $500 million invested...

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Finance

ou plan to invest inthe Kish Hedge Fund, which has total capital of $500 millioninvested in five stocks:
Stock Investment Stock's BetaCoefficient
A $160 million 0.6
B 120 million 1.1
C 80 million 1.7
D 80 million 1.0
E 60 million
1.4
Kish's betacoefficient can be found as a weighted average of its stocks'betas. The risk-free rate is 6%, and you believe the followingprobability distribution for future market returns isrealistic:
Probability MarketReturn
0.1 -26 %
0.2 0
0.4 12
0.2 32
0.1 50
What is the equation forthe Security Market Line (SML)? (Hint: First determine the expectedmarket return.)
r_i = 6.0% +(7.6%)b_i
r_i = 9.6% +(9.1%)b_i
r_i = 6.0% +(9.0%)b_i
r_i = 9.9% +(7.6%)b_i
r_i = 9.9% +(9.0%)b_i
-Select-IIIIIIIVV
Calculate Kish's requiredrate of return. Do not round intermediate calculations. Round youranswer to two decimal places.
%
Suppose Rick Kish, thepresident, receives a proposal from a company seeking new capital.The amount needed to take a position in the stock is $50 million,it has an expected return of 15%, and its estimated beta is 1.5.Should Kish invest in the new company?
The new stock-Select-should notshould be purchased.
At what expected rateof return should Kish be indifferent to purchasing the stock? Roundyour answer to two decimal places.
%
Assume that therisk-free rate is 3.5% and the required return on the market is 8%.What is the required rate of return on a stock with a beta of 3?Round your answer to two decimal places.

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The expected Market return Beta Of Portfolio ProbabilityPMarket Return R See Answer

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ou plan to invest inthe Kish Hedge Fund, which has total capital of $500 millioninvested in five stocks:StockInvestmentStock's BetaCoefficientA$160 million0.6B120 million1.1C80 million1.7D80 million1.0E60 million1.4Kish's betacoefficient can be found as a weighted average of its stocks'betas. The risk-free rate is 6%, and you believe the followingprobability distribution for future market returns isrealistic:ProbabilityMarketReturn0.1-26%0.200.4120.2320.150What is the equation forthe Security Market Line (SML)? (Hint: First determine the expectedmarket return.)ri = 6.0% +(7.6%)biri = 9.6% +(9.1%)biri = 6.0% +(9.0%)biri = 9.9% +(7.6%)biri = 9.9% +(9.0%)bi-Select-IIIIIIIVVCalculate Kish's requiredrate of return. Do not round intermediate calculations. Round youranswer to two decimal places.%Suppose Rick Kish, thepresident, receives a proposal from a company seeking new capital.The amount needed to take a position in the stock is $50 million,it has an expected return of 15%, and its estimated beta is 1.5.Should Kish invest in the new company?The new stock-Select-should notshould be purchased.At what expected rateof return should Kish be indifferent to purchasing the stock? Roundyour answer to two decimal places.%Assume that therisk-free rate is 3.5% and the required return on the market is 8%.What is the required rate of return on a stock with a beta of 3?Round your answer to two decimal places.