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Business, 21.04.2020 18:36 namoralessimon03

In addition to risk-free securities, you are currently invested in the Tanglewood Fund, a broad-based fund of stocks and other securities with an expected return of 12.00 % and a volatility of 25.00 %. Currently, the risk-free rate of interest is 4.00 %. Your broker suggests that you add a venture capital fund to your current portfolio. The venture capital fund has an expected return of 20.00 %, a volatility of 80.00 %, and a correlation of 0.20 with the Tanglewood Fund. Calculate the required return and use it to decide whether you should add the venture capital fund to your portfolio.

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