Suppose you are the money manager of a $2 million investment fund. The fund consists of four stocks with the following investments and betas. Stock Investment Beta A $ 200 000 1.50 B $ 300 000 -0.50 C $ 500 000 1.25 D $1000 000 O.75 If the market required rate of returns is 28 and the risk-free is 12%: Calculate: i. Stock A required rate of return (3 marks) ii. Stock B required rate of return (3 marks) iii. Stock C required rate of return (3 marks) iv. Stock D required rate of return (3 marks) v. What is the Fund’s required rate of return? (5 marks)

Partnerships are the most common type of business firms in the world. t/f

Suppose that hubert, an economist from an am talk radio program, and kate, an economist from a nonprofit organization on the west coast, are arguing over government bailouts. the following dialogue shows an excerpt from their debate: kate: to recent financial crises, the concept of bailouts is a hot topic for debate among everyone these days. hubert: indeed, it’s gotten crazy! a government bailout of severely distressed financial firms is unnecessary because free markets will properly price assets. kate: i don’t know about that. without a bailout of severely distressed financial firms, the economy will experience a deep recession. the disagreement between these economists is most likely due todifferences in scientific judgments . despite their differences, with which proposition are two economists chosen at random most likely to agree? business managers can raise profit more easily by reducing costs than by raising revenue. central banks should focus more on maintaining low unemployment than on maintaining low inflation. employers should not be restricted from outsourcing work to foreign nations

Two assets have the following expected returns and standard deviations when the risk-free rate is 5%: asset a e(ra) = 18.5% σa = 20% asset b e(rb) = 15% σb = 27% an investor with a risk aversion of a = 3 would find that on a risk-return basis. a. only asset a is acceptable b. only asset b is acceptable c. neither asset a nor asset b is acceptable d. both asset a and asset b are acceptable