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Joel Foster is the portfolio manager of the SF Fund a $3 million hedge fund that contains the following stocks The required rate of return on the market is 1100% and the risk free rate is

Joel Foster is the portfolio manager of the SF Fund, a $3 million hedge fund that contains the following stocks. The required rate of return on the market is 11.00% and the risk-free rate is 5.00%. What rate of return should investors expect (and require) on this fund?

Stock

Amount

Beta

A

$1,075,000

1.50

B

     675,000

0.30

C

     750,000

0.80

D

  1,500,000

1.40

  $4,000,000  
     
   

10.56%

   

10.83%

   

11.11%

   

11.48%

   

11.77%

 

Apr 29 2020 View more View Less

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