$(15$ Percent$)$ Assume that you are the portfolio manager of the YTT Fund, a $$5$ million hedge

fund that contains the following stocks. The required rate of return on the market is $12\mathrm{.}00\%$ and

the risk$-$free rate is $4\mathrm{.}50\%.$

a$.$ What rate of return should investors expect $($and require$)$ on this fund and what is the beta

of this fund?

b$.$ The investors require you to reduce the risk of the fund and thus you plan to cut the

investment in Stock C by $$500,000$ and add $$500,000$ to stock B$.$ What will the fund's

required rate of return be after this change?