Sinclair Fund has invested in securities of five corporations. The market value of each of the investments and the beta of the corporations is as follows:
Stock Investment Beta
3
- 1 $6 million
- 2 $5 million
- 3 $4 million
- 4 $3 million
- 5 $2 million
0.50 0.80 1.00 1.40 2.00
The risk free rate is 7 percent and
a) What is the portfolio's beta coefficient? (5 marks) b) What is the fund's required rate of return?