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Unformatted text preview: = 12%). b) Calculate the standard deviation of expected returns for Stock Y (standard deviation of expected returns for Stock Y = 20.35%). Now calculate the coefficient of variation for Stock Y. Is it possible that most investors might regard Stock Y as being less risky than Stock X? Explain. 5) Suppose you are the money manager of a $5 million investment fund. The fund consists of 4 stocks with the following investments and betas: Stock Investment Beta__ A $600,000 1.00 B $800,000 0.80 C $1,400,000 1.10 D $2,200,000 0.75 If the market’s required rate of return is 12% and the risk-free rate is 5%, what is the fund’s required rate of return?...
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This note was uploaded on 01/11/2011 for the course BUS 320 taught by Professor Sloan during the Winter '08 term at N.C. State.
- Winter '08