Question: You are the new VP Treasury at Morgoth's Amusements, a manufacturer of fantasy-themed carnival rides. You are reviewing your predecessor's investments. The Board of Directors have set the required rate for long-term investments at a minimum of 11.5%. Below is the portfolio of investments:
|
Stock
|
Investment
|
Beta
|
|
Balrog Hot Yoga Centres
|
$4,250,000
|
1.92
|
|
Gondolin Security
|
$2,355,000
|
0.93
|
|
Ulmo's Beach Resorts
|
$720,000
|
1.4
|
|
IBM Corp
|
$1,850,000
|
0.87
|
If the return on the market portfolio is 9% and the 90-day T-Bills are selling at 2% (the risk-free rate); is the expected return of the portfolio aligned with the required return as set by the Board of Directors?