# Required Rate of Return on Retirement Fund Assets

Not what you're looking for?

The assets of a particular investment fund are:

Stock A with an Investment of $200,000 and a beta of 1.50. Stock B with an Investment of $300,000 and a beta of -0.50. Stock C with an Investment of $500,000 and a beta of 1.25. Stock D with an Investment of $1,000,000 and a beta of 0.75.

The required market rate of return is 15% and the risk-free rate is 7%. What is the required rate of return on the investment fund?

a) 14.3%

b) 15.0%

c) 13.1%

d) 12.7%

e) 10.3%

##### Purchase this Solution

##### Solution Summary

The solution clearly shows the steps that are required to calculate the expected rate of return using the CAPM method. Step by step instructions are provided for the student which makes it easy for anyone with a basic understanding of finance to understand the solution. OTA concisely explains the concepts and steps and does a superb job of getting to the right answer.

##### Solution Preview

Find the beta of the portfolio.

Assuming there are only 4 stocks in the portfolio, the weight of each stock is as follows:

Wa: 200000/2000000 = 0.1

Wb: ...

##### Purchase this Solution

##### Free BrainMass Quizzes

##### Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

##### Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

##### Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

##### Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

##### Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.