Sinclair fund has invested in securities of five


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

1                     $6 million                   0.50

2                     $5 million                   0.80

3                     $4 million                   1.00

4                     $3 million                   1.40    

5                     $2 million                   2.00

The risk free rate is 7 percent and the return on the market portfolio is 12 percent

a) What is the portfolio's beta coefficient?

b) What is the fund's required rate of return?

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Finance Basics: Sinclair fund has invested in securities of five
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