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Required Rate of Return

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Charles is the investment manager for a $10 million investment portfolio. The fund is invested in 5 stocks with the following investments and betas:

Stock Investment Beta
Stock 1 $3,000,000 1.1
Stock 2 $3,000,000 2.1
Stock 3 $1,000,000 0.2
Stock 4 $2,000,000 0.6
Stock 5 $1,000,000 1.9

If the market required rate of return is 13% and the risk-free rate is 7%, what's the portfolio's required rate of return?

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The expert examines the requires rate of return.

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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