You have been appointed as a consultant for a Saudi hospital to assess securities risk. You expect your mutual fund portfolio to earn 11% this year. The beta of the portfolio is .8.
If the rate of return on risk-free assets is 4% and you think the rate of return on portfolio A will be 14%, then what expected rate of return should you get before deciding whether to invest more in the mutual fund?
Is this mutual fund attractive?
If the Treasury bill rate is 4% and the expected market return is 12%, then using CAPM - calculate the following:
A) What is the risk premium in the market?
B) What is the required return on an investment with a beta 1.5?
C) If a mutual fund B introduces B with beta. 8. Expected rate of return of 9.8% - is NPV positive?
D) If the market expects an 11.2% return from the X investment fund, then what is a beta?
How can you mix a mutual fund with a risk-free position in treasury bills or certificates of deposit to increase the expected rate of return on the portfolio while keeping the risk level the same or even reducing the risk?
As part of your evaluation of this assignment, explain why a mutual fund needs to provide an expected rate of return that exceeds the expected stock market line so that investors find the fund attractive.
Your final submission will be 4 to 5 pages in length excluding cover and reference pages. Be sure to include:
Summary of results.
Analyze the acceptable level of risk for each scenario.
Your paper must meet the following structural requirements:
Paper length should be 4-5 pages, not include cover sheet and reference page.
The paper must be formatted according to the writing standards issued by APA and the Saudi Electronic University.
Support your financial statements with text citations from no fewer than four scholarly articles.
Two of these sources may be from classroom readings or a textbook, but the others must be external and come from peer-reviewed journals.
The Saudi Digital Library is a good place to find these references.
We strongly encourage you to submit all assignments to the Turnitin Originality Check before submitting them to your instructor for grading. If you are not sure how to submit an assignment to the Originality Check, see the Student's Guide to the Turnitin Originality Check.
The references must be the last five years
Hope to get a good job and a perfect fit-out solution
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