Business
Business, 22.10.2019 20:00, 223103

Ou plan to invest in the kish hedge fund, which has total capital of $500 million invested in five stocks: stock investment stock's beta coefficient a $160 million 0.4 b 120 million 1.3 c 80 million 1.7 d 80 million 1.0 e 60 million 1.7 kish's beta coefficient can be found as a weighted average of its stocks' betas. the risk-free rate is 4%, and you believe the following probability distribution for future market returns is realistic: probability market return 0.1 -24 % 0.2 0 0.4 14 0.2 30 0.1 45 what is the equation for the security market line (sml)? (hint: first determine the expected market return.) ri = 4.0% + (9.7%)bi ri = 7.1% + (9.6%)bi ri = 4.0% + (10.7%)bi ri = 4.9% + (9.7%)bi ri = 4.9% + (10.7%)bi calculate kish's required rate of return. do not round intermediate calculations. round your answer to two decimal places. % suppose rick kish, the president, receives a proposal from a company seeking new capital. the amount needed to take a position in the stock is $50 million, it has an expected return of 15%, and its estimated beta is 1.5. should kish invest in the new company?

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