# Calculating the fund's beta and required rate of return

Alcoa's Inc.'s Pension Fund holds 4 stocks. The market's required rate of return is 6% and the risk free rate is 2%.

Stock Investment Beta

A $300,000 1.75

B $500,000 -0.75

C $1,000,000 1.05

D $500,000 0.75

a. What is this fund's beta?

b. Calculate the required rate of return.

https://brainmass.com/economics/investments/calculating-the-fund-s-beta-and-required-rate-of-return-516792

#### Solution Preview

a. What is this fund's beta?

Investment in stock A=Ia=300,000

Beta of stock A=ba=1.75

Investment in stock B=Ib=500,000

Beta of stock B=bb=-0.75

Investment in stock C=Ic=1,000,000

Beta of stock ...

#### Solution Summary

Solution describes the steps to calculate the beta and required rate of return for the given fund.

$2.19