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    Assume that you are the portfolio manager of the Coastal Fun

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    Assume that you are the portfolio manager of the Coastal Fund, a $3 million hedge fund that contains the following stocks.

    The required rate of return on the market is 10.00% and the risk-free rate is 4.00%. What rate of return should investors expect (and require) on this fund?

    Amount Beta
    Stock A $1,025,000 1.70
    Stock B 675,000 0.50
    Stock C 750,000 1.40
    Stock D 550,000 0.85
    $3,000,000

    © BrainMass Inc. brainmass.com October 10, 2019, 3:35 am ad1c9bdddf
    https://brainmass.com/business/leadership-skills/coastal-fund-rate-return-investors-should-expect-426307

    Solution Preview

    Stock Weight in Portfolio (Weight Ã- beta)
    A 1,025,000/3,000,000= 0.3417 ...

    Solution Summary

    This solution provides steps to determine the rate of return investors should expect.

    $2.19