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consider the following information and then calculate the required rate of return for the universal investment fund, which holds 4 stocks. the market's required rate of return is 13.25%, the risk-free rate is 7.00%, and the fund's assets are as follows: beta a 150000

Respuesta :

As per the concept of CAPM,  the required rate of return for the universal investment fund, which holds 4 stocks is $19,875.07

CAPM:

In economics, CAPM or the capital asset pricing model gives us the required return on the basis of the risk factors and it is given as the risk free rate plus the total of the market risk premium multiplied by the beta.

Given,

Here we have the market's required rate of return is 13.25%, the risk-free rate is 7.00%.

Now, we need to find the required rate of return for the universal investment fund, which holds 4 stocks.

Based on the CAPM, the required return of the portfolio is calculated as,

=>  Risk free rate + (Market Risk Premium x Portfolio Beta)

Apply the value of the formula, then we get,

=> 7.00% + (150000 x 13.25%)

=> 0.07 + (150000 x 0.1325)

=> 19875.07

To know more about CAPM here.

https://brainly.com/question/15548553

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