Posted: February 26th, 2023

See attachment below

FOR THIS week Assignment, you will submit your written answers to questions and calculated

answers to problems on an Excel spreadsheet using formulas for your calculations. I will be

downloading the spreadsheet to review the formulas in the cells of your answers.

The weekly assignment should have an APA title page, an APA reference page, and in-text citations.

Chapter 8

Question 8-4

Problem 8-2

Problem 8-7

Problem 8-17

QUESTION

8-4 Is it possible to construct a portfolio of real-world stocks that has a required return equal to the

risk-free rate? Explain.

PROBLEMS

8-2 PORTFOLIO BETA An individual has $20,000 invested in a stock with a beta of 0.6 and another

$75,000 invested in a stock with a beta of 2.5. If these are the only two investments in her portfolio,

what is her portfolio’s beta?

8-7 PORTFOLIO REQUIRED RETURN Suppose you are the money manager of a $4.82 million

investment fund. The fund consists of four stocks with the following investments and betas:

STOCK Investment Beta

A $ 460,000 1.50

B 500,000 (0.50)

C 1,260,000 1.25

B 2,600,000 0.75

If the market’s required rate of return is 8% and the risk-free rate is 4%, what is the fund’s required

rate of return.

8-17 PORTFOLIO BETA A mutual fund manager has a $20 million portfolio with a beta of 1.7.

The risk-free rate is 4.5%, and the market risk premium is 7%. The manager expects to receive an

additional $5 million, which she plans to invest in a number of stocks. After investing the additional

funds, she wants the fund’s required return to be 15%. What should be the average beta of the new

stocks added to the portfolio?

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