Calculate the Required Rate of Return for the Wagner Assets

question 28

Multiple Choice

Calculate the required rate of return for the Wagner Assets Management Group, which holds 4 stocks.The market's required rate of return is 15.0%, the risk-free rate is 7.0%, and the Fund's assets are as follows: $$\begin{array} { c r r } \text { Stock } & \text { Investment } & \text { Beta } \\\text { A } & \$ 200,000 & 1.50 \\\text { B } & 300,000 & - 0.50 \\\text { C } & 500,000 & 1.25 \\\text { D } & 1,000,000 & 0.75\end{array}$$

• A) 10.67%
• B) 11.23%
• C) 11.82%
• D) 12.45%
• E) 13.10%

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Definitions:

Purchase Price

The amount of money required to acquire a good or service.

Stock-Out Costs

The expenses incurred by a business when it runs out of stock on a particular item, including lost sales, customer dissatisfaction, and potential reduction in market share.

Buyer's Market

A market condition characterized by an abundance of goods available for sale, giving buyers an advantage over sellers in terms of price negotiations.

Seller's Market

A market condition characterized by a shortage of goods available, leading to sellers having an advantage over buyers in price negotiations.